Updated from 10:31 a.m. EST
chief executive David Glass, who oversaw a vast expansion of the retailing giant during his 12-year tenure, will step down effective immediately and Lee Scott Jr., current chief operating officer and vice chairman, will take his place, the company said Friday.
Glass, 64, will stay on with the retail giant for a year as chairman of the executive committee of the board of directors, Wal-Mart said in a statement. Shares of Wal-Mart, based in Bentonville, Ark., showed little reaction to the news, rising a slight 1/4 to 65 3/8. (Mal-Mart closed down 5/8, or 0.96%, at 64 1/2.)
Dan Binder, an analyst at
Brown Brothers Harriman
, was not surprised by Glass' resignation but was irked by how abruptly it occurred.
"You would expect the chief executive of a Fortune 500 company to give a bit of lead time," he said. Binder rates Wal-Mart a short-term neutral chiefly because of its high stock price. His form has done no underwriting for the retailer.
"It's the culmination of a very deliberate strategy," said Jay Allen, a Wal-Mart spokesman. "One of David's biggest objectives for the past couple of years was to develop his own successor."
Under Glass, who had been handpicked by founder Sam Walton to succeed him as chief executive, the Wal-Mart empire grew revenue 931% between Jan. 31, 1988, and Jan. 31, 1999, cementing its position as the world's largest retailer.
Glass was also responsible for developing Wal-Mart's Supercenter concept and creating the
warehouse-style store, where shoppers buy quantities in bulk. Glass increased the total number of stores to 2,941.
Glass was an important force behind Wal-Mart's adoption of an automated distribution system, which links computers of suppliers and Wal-Mart stores.
One of the most signficant achievements of the outgoing chief executive was Wal-Mart's expansion into Argentina, Brazil, Germany, Korea, the U.K., Canada, Mexico, China and Puerto Rico.
In Europe in particular, Wal-Mart has emerged as a growing force, putting pressure on competitors in the U.K. and Germany to cut prices and expand their services.
No reasons were cited for the timing of Glass' departure, but there had been some expectations that he would eventually step down.
Glass also is the chief executive of the
Kansas City Royals
"The key to Wal-Mart is our people," said Rob Walton, the chairman of Wal-Mart and son of the founder. "We have no doubt that the same collaborative culture which has always driven the success of our company and served our leaders so well will also help make Lee Scott successful in his new role."
Brown Brothers Harriman's Binder does not anticipate a major shift in strategy under Scott. "Growth over the next five years will be the execution of the plans Glass put in place. They will continue with superstore expansion, their neighborhood market stores and international growth."
Salomon Smith Barney
analyst Richard Church corroborated this view in a report Friday. "A clear succession plan has been formulated and articulated for over a year so this announcement is not unexpected," he wrote. "Mr. Scott is very well regarded and very capable. We do not expect a change in direction or strategy to result from this announcement."
Scott, 50, became chief operating officer a year ago and played key roles in developing the distribution network as the director of transportation.
In 1998, Scott was named president and chief executive officer of the Wal-Mart stores division and presided over more than 2,300 Wal-Mart stores.
"In the words of David, this is the right time and leaves the right guy in the office," said spokesman Allen.