Blog > US Stocks and Markets > Wal-Mart’s (NYSE:WMT) CEO resigns: Is trouble brewing?
Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

Wal-Mart’s (NYSE:WMT) CEO resigns: Is trouble brewing?

Today's Financial News - Posted November 21, 2008

It is turning out to be a monumental day for Wal-Mart (NYSE:WMT). Its long-time CEO, Lee Scott is stepping down and a new sheriff is coming to town. Is changing leadership in the middle of a retail hurricane a good idea? Or is Scott abandoning ship when shareholders need him most?

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): It has been an interesting day for Wal-Mart (NYSE:WMT) shareholders. They woke up to news that their CEO, Lee Scott is on his way out and Mike Duke is on his way in.

As recently as a year ago, many Wal-Mart shareholders would have loved to see Scott with a box in his hands and a severance check in his back pocket. After all, the rest of the market was soaring and the giant retailer’s share price was stagnant. Activist shareholders wanted a more aggressive top dog.

But now that the economy has made a strong reversal and Wal-Mart is the only Dow component showing a gain on the year, those same shareholders will not be holding the door for Scott as he departs the company. In fact, they will probably block it. His strategic command has made the company one of the most stable equity investments on the market.

Fortunately, Scott’s replacement is no corporate slouch. Duke has been with the company since 1994 and was most recently in charge of Wal-Mart’s international division, a huge growth and profit center for the company. His global retailing expertise may prove quite valuable as the company struggles to find ways to continue the growth shareholders have been accustomed to.

Changing of the guards

So far, Wall Street has made only minor reactions to the news. Shares of Wal-Mart are up by just 2% today, a step above the major equity indices.

While Duke will ultimately add to Wal-Mart’s success, this news does sound alarm bells. First, Scott’s resignation is fairly sudden. After nine years at the top post, few analysts saw today’s action coming. It may be a signal that things are not as great at the company as they may seem.

Also, today’s move is the equivalent of changing horses in the middle of a stream. The retailing world is on its knees, and Wal-Mart is the sole oasis in the desert. Changing leader in the middle of a recession could lead to trouble as any new strategies created by Duke are almost certainly going to find comparisons to Scott and plenty of challenges from within the ranks.

Only time will tell us how this move will turn out. Wal-Mart is a strong company with an even stronger history. But as the recent financial crisis has shown us, any company is only as strong as its leaders.

Hopefully, Wal-Mart’s new leader is the strongest yet. In this environment, he better be good.


Next Article: After LVS, Wynn set to lose

Related Articles

Posted by Andrew Snyder · Filed Under US Stocks and Markets 

Share this article:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • NewsVine
  • StumbleUpon
  • Twitter

 Add to Technorati Favorites | Follow Us on Twitter!

Be the first to leave a reply.

Your comments are welcome