2012 Power 50: No. 1 Mike Duke

In his three years as chief executive officer at Wal-Mart Stores, Mike Duke has demonstrated a willingness to learn from the past as he sets out for the future.

Whether addressing lackluster sales in Wal-Mart’s U.S. supercenters or an ethics crisis surrounding stores in Mexico, Duke’s actions tend to draw heavily from the experiences of his predecessors, and his words are couched in the same context.

In a speech at Wal-Mart’s annual meeting last month, Duke discussed how “enduring values” have been a strength of the company over its first 50 years, and that building upon them would ensure future success.

“If we look back on our success over the past 50 years and ask the simple question: ‘Why Wal-Mart and not another retailer?’ I believe there’s a simple answer. It’s the culture, the beliefs, and it’s the enduring values that live within us and are expressed through our actions every day,” Duke said. “No matter who we are or where we come from, our values pull us together and keep us together. They constantly push us forward to become a better and stronger company. This is my message to you today: The values that built Wal-Mart, defined Wal-Mart and sustained Wal-Mart for the past 50 years will drive our success and make us proud for the next 50 years.”

In addressing a lengthy streak of declining same-store sales at U.S. stores, Duke oversaw a team that strove to go “back to basics” — building stores at a fast rate, returning selection to shelves and pallets of goods to the aisles, emphasizing everyday low prices, and cutting costs. A year ago, he assured investors that sales would rebound in the second half of the year as a result, and sure enough they did.

After eight consecutive quarters of same-store sales declines (excluding fuel) in the U.S., Wal-Mart in last year’s third and fourth quarters posted gains of 1.3% and 1.5%, respectively, followed by a gain of 2.6% in the first quarter of the current fiscal year.

The company also has been positioning itself more directly against traditional supermarkets in its advertising, with its “See for yourself” ad campaigns showcasing price comparisons.

On the store-development front, it has been more aggressively rolling out the Neighborhood Market for mat around the country and is continuing to test its smaller Walmart Express stores in multiple markets, including Chicago.

Of the alleged bribery scandal in Mexico, Duke told shareholders that Wal-Mart “is committed to compliance and integrity everywhere we operate. And we’re working to continually strengthen our compliance efforts around the world. I want to personally ensure you, we’re doing everything we can to get to the bottom of this matter. We will take appropriate action when the investigation is complete.”

Maggie Gilliam of New York retail consultants Gilliam & Co. described Duke as having a sense of humility that was common with predecessors at Wal-Mart, including founder Sam Walton. She noted Duke is the first CEO at Wal-Mart ever required to execute a turnaround in the U.S.

“Up until Wal-Mart stores got into the mess it was into nobody had ever challenged Sam Walton’s principles. That’s the bible at Wal-Mart, and somehow, the company stopped paying attention to it, and it happened so subtly, no one even noticed it was going on,” Gilliam told SN.

“Mike Duke put the right people in the right places,” she added. “He hired [Wal-Mart U.S. President] Bill Simon. He brought in some good merchants, promoted some good merchants and it’s really worked.”