Fleming Leaves Wal-Mart

JON SPRINGER

BENTONVILLE, Ark. — John Fleming, the chief merchandising officer at Wal-Mart Stores and architect of its recent remerchandising effort, has resigned, the retailer here said.

The move, announced only days after Bill Simon was promoted to president and chief executive officer of Walmart U.S., could lead to changes in Wal-Mart's merchandising strategy, observers said. Simon, in a memo to employees announcing the move, invoked Wal-Mart founder Sam Walton, saying that the company has “a responsibility to always look for ways to improve, and that we must never get set in our ways.”

Fleming, a former Target executive, had served at Wal-Mart for 10 years, the last five as its CMO. He was behind Wal-Mart's “Win Play Show” remerchandising plan and SKU rationalization at the heart of its Project Impact initiative. Those changes — which contributed to improved store conditions at Wal-Mart but may have cost the chain some of its promotional intensity — have come under some scrutiny as Wal-Mart attempts to reverse four quarters of sagging sales and store traffic.

Deborah Weinswig, an analyst for Citibank, in a note to clients said Fleming had “a rocky track record, including a failed attempt to take the Wal-Mart brand upscale in 2005.”

Fleming's departure gives Simon “the opportunity to set a new course for Wal-Mart's merchandising organization, which in turn, could lead to improvement in apparel and home in our view,” she added.

Others noted Fleming's departure was part of a “domino effect” of changes in the organization as it transforms under CEO Mike Duke, who took over from Lee Scott 18 months ago. The recent ascension of Simon to the head of Wal-Mart's U.S. stores was part of that, sources said.

“Lee Scott's people are leaving while Mike Duke and Simon and [Sam's Club President and CEO] Doug McMillon are an entirely new team, and their people are being promoted,” said Burt P. Flickinger III, managing partner at Strategic Resource Group, New York.

Flickinger told SN that he felt Fleming made mostly positive changes at Wal-Mart but that those changes weren't fully felt as the down economy impacted Wal-Mart's shoppers. The slowdown in same-store sales in the meantime has prompted Wal-Mart to make some adjustments to the Project Impact strategy including reintroducing previously pruned products and promotional displays and increasing the number and intensity of its temporary price reductions.

“Fleming did a superb job bringing Wal-Mart into the 21st century,” Flickinger said.

Simon in the memo said Fleming “made a personal decision to leave the company.” Jack Sinclair, executive vice president and general manager of grocery, will lead food and health and wellness merchandising, Simon said, and John Westling will lead general merchandise merchandising while the company searches for a permanent replacement for Fleming.

“[Fleming] had a huge impact on Wal-Mart and the direction it took,” Neil Stern, senior partner at McMillan Doolittle, Chicago, told SN. “I'm sure someone else will come in and may have a slightly different point-of-view of the best way to do things. But I think 98% of the things John did at Wal-Mart were positive, and that's the way they will be perceived.”

Stern added that he felt Fleming would resurface in a CEO role at another retailer “pretty quickly.”

Simon in his memo said that he would maintain the management reorganization introduced earlier this year, which aligned Wal-Mart's three U.S. operating divisions (logistics, real estate and store operations) with its three U.S. geographic divisions, known as West, South and North. He also said that Gisel Ruiz had been promoted to executive vice president of Walmart People, responsible for human resources, talent management and compensation.