2010 Power 50: No. 1 Mike Duke
Mike Duke, president and CEO of Wal-Mart Stores, is ranked No. 1 in SN's 2010 Power 50. Read his profile here.
December 15, 2011
The collective sigh of relief that traditional food retailers might have felt as Wal-Mart Stores slowed its domestic expansion pace during the last few years didn’t last long.
Although the Bentonville, Ark.-based company might not be building new stores in the U.S. at the breakneck pace it once was, it only accelerated its low-price leadership this year with the return of a more aggressive schedule of “rollbacks.”
“It is important to strengthen Wal-Mart’s position as the everyday price leader and to separate ourselves even more from competitors,” said Mike Duke, president and chief executive officer, in a recent earnings conference call with analysts.
Duke has been in the post for about a year and a half, taking over just as the country was in the midst of an economic downturn. Although sales in the U.S. have been sluggish — comparable-store sales have been negative in the U.S. for the last four quarters — and some merchandising efforts like SKU rationalization have backfired, the company has shown strong improvement in profitability during that time through aggressive cost-containment and increased productivity.
“The fundamental thing Mike Duke and [former Walmart U.S. CEO] Eduardo Castro-Wright did at Wal-Mart was that they reset the financial model for Wal-Mart in the U.S. for a low-growth world, which is going to be the case for the next five to 10 years,” said Bryan Gildenberg, chief knowledge officer, Kantar Retail. “They are going to have much less square footage growth than they have historically, and Wal-Mart’s engine needed to be retooled to generate cash in a slower-growth environment. That’s hard work, and they have done a reasonably good job with that.”
Duke came into the CEO role with perhaps the broadest experience within the company of anyone who has ever held that position. His background included stints in logistics, as well as running the U.S. operations and the company’s international division. Duke joined the company 1995, after spending 23 years with Federated Department Stores and May Department Stores.
It is his international experience, in particular, that some analysts said could exert a great deal of influence his tenure as CEO. Duke headed Wal-Mart’s international business from 2005 until February of last year, and international business is expected to be the main growth engine for the company in the near term.
At the company’s annual shareholders’ meeting last month, he explained that his primary areas of focus as the CEO of the company are “people and sales,” noting that the company’s global expansion will add 500,000 jobs around the world during the next five years.
He said he sees four priorities for Wal-Mart:
“First, we must become a truly global company. Second, we must understand the business challenges that retailers will face and solve them. Third, we need to play an even bigger leadership role on social issues that matter to our customers. And most important, we must do all of this while keeping our culture strong everywhere.”
He described himself as a leader who thrives on the details of the business — “I love the details of retail,” he said — and one who likes to “manage by walking around,” citing a recent visit to a vendor meeting.
One industry observer, who asked not to be identified, described Duke as
“not a classic operator,” but someone who “relies on good people to give him the information.” His predecessor, Lee Scott, saw Duke as an intelligent and “honorable individual” who would be a good leader for the company.
“He’s not a great orator, but he’s a first-rate, well-balanced executive,” the observer said.
At the annual meeting, Duke stressed the importance of the company’s international operations in its future growth. Last year, international sales passed $100 billion for the first time, and square-footage growth outpaced growth in the U.S. by more than 50%, with 21 million added internationally and 13 million in the U.S. The company ended the most recent fiscal year with more than 8,400 stores worldwide, operating in 53 different formats.