Wal-Mart Stores, Inc. WMT recently named its new chief financial officer and announced three other personnel changes, in the latest shuffling of its management ranks as it grapples with sluggish earnings.
This Bentonville, AR-based company has appointed Brett Biggs, 47, as the new CFO. Biggs has been serving as the CFO and executive vice president of Wal-Mart's international business since 2014. Biggs will replace Charles Holley, 59, who will retire from the position on Dec 31. Holley will remain with the company for a month to help Biggs with the transition.
In a separate release, the company also announced three other personnel changes on Oct 9. It named Steve Bratspies as its new chief merchandising officer, slated to take up his role from Oct 19. He will be responsible for all merchandise categories across more than 4,500 stores in the U.S. business and will continue to report to Greg Foran, Wal-Mart U.S. president and CEO. Bratspies is replacing Duncan Mac Naughton, who left the company before the holiday season last year.
Other than this, Wal-Mart appointed Charles Redfield as executive vice president of food for Wal-Mart U.S. and John Furner as executive vice president of merchandising for the company's warehouse store chain Sam's Club.
The recent shuffling of posts comes in the wake of challenges faced by the retail giant to increase sales and attract new customers.
Last week, Wal-Mart laid off 450 workers out of its approximately 18,000 employees at its headquarters in Arkansas. The job cuts are intended to keep its pricing competitive and reduce expenses.
We note that Wal-Mart has been posting disappointing results for the past several quarters due to sluggish U.S. sales. Wal-Mart is also facing intense competition on all fronts, ranging from dollar stores to the traditional grocery store chains and online business. It is also trying to keep pace with rapidly changing customer trends.
Wal-Mart also anticipates huge expenses over the near term. In an effort to compete with the biggest online retailer Amazon.com, Inc. AMZN and to improve customer service, Wal-Mart is aggressively investing in its e-commerce business. The company has already pledged to spend $1 billion to raise employees’ wages and give them extra training, which has raised the expense burden of the retailer. We note that Wal-Mart had increased its minimum wage to $9 an hour in April, and expects to increase it to $10 per hour in Feb 2016. Higher labor costs along with the company’s efforts to overhaul its stores and invest in its online operations have weighed on its earnings.
The company is thus looking to increase margins by cutting down on costs and at the same time making efforts to pass on the lower prices to its customers. Last month, per Bloomberg, the company slashed workers’ hours at some of its store locations in an effort to check its costs. Reportedly, Wal-Mart even tried to put pressure on more than 10,000 suppliers worldwide for a 2%-6% reduction in the costs of general Chinese goods such as apparels, shoes, beauty products, and electronics. It intends to share the savings generated from currency headwinds in China with its customers in the form of lower prices.
The new CFO and merchandising officer are expected to understand the company’s struggle and make efforts to revive the business. Wal-Mart carries a Zacks Rank #5 (Strong Sell).
Some better-ranked retailers include The Kroger Co. KR and Roundy’s Inc. RNDY, both holding a Zacks Rank #2 (Buy).
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