Wal-Mart Stores Inc. (WMT) named its top China executive to head its Asian operations amid store closures and sluggish sales in the region that have hampered the retailer’s attempts to counter slowing growth in the U.S.
Greg Foran, the chief executive officer of Wal-Mart’s Chinese operations since 2012, will take over as president and CEO of Asia from Scott Price, Wal-Mart, the world’s largest retailer, said today. Price, 53, will move to the company’s headquarters in Bentonville, Arkansas, as an executive vice president. The changes take effect June 1.
The management changes follow board movements announced this week and come as the company’s profit forecast for the full year trails analyst estimates. Wal-Mart is trying to gain a stronger foothold in China, the second-largest economy, and plans to open more stores even as it shuts underperforming outlets and battles concern about food safety after fox DNA was found in meat it sold as donkey.
Foran’s “reputation was somebody who is a strong operations person” and his expertise would probably be needed as Wal-Mart plans to scale up its footprint in Asia, said James Roy, senior analyst at Shanghai-based China Market Research Group.
Price, who joined Wal-Mart in 2009 as Asia CEO, will be an executive vice president heading up areas including international strategy, real estate, and mergers and acquisitions, the retailer said in a statement. He previously served as CEO of DHL Express’s Europe and Asia-Pacific operations, and spent a decade with Coca-Cola Co. in roles including director and country manager in China.
Wal-Mart shares gained 0.4% to $78.62 at the close in New York.
International Expertise
The new strategy role will allow Wal-Mart to leverage Price’s international experience, Anthony Rose, a company spokesman in Hong Kong, said in an e-mail.
In promoting Foran, Wal-Mart is tapping an executive with 30 years of retail experience in operations, merchandising, marketing and replenishment, according to the statement. Foran, 52, previously headed Woolworths Ltd.’s supermarket division and held other senior roles at the Sydney-based company, including general manager of the Big W chain of discount stores.
Sean Clarke, 46, currently chief operating officer in China, will succeed Foran, Wal-Mart said.
The promotions will allow Wal-Mart to meet the needs of the company wherever it operates, David Cheesewright, CEO of the international division, said in a statement.
Missing Estimates
The retailer forecast full-year profit that lagged behind analyst estimates amid cuts to government benefits and tighter credit in the U.S., its biggest market accounting for 71% of revenue in the latest 12-month period.
Profit per share will be $5.10 to $5.45 in the year ending January 2015, Wal-Mart said Feb. 20. The average of 28 analysts’ estimates compiled by Bloomberg at the time was $5.55 a share.
Wal-Mart faces challenges in several Asian countries. The retailer was previously fined in China over food safety, including the mislabeling of ordinary pork as organic in 2011. In January this year, the company recalled the donkey products and said it was stepping up inspections on vendors and conducting DNA tests of meat sold in the nation.
Wal-Mart has said since 2012 it has slashed its number of pork suppliers in China by almost 80%, to around 100, as part of moves to reduce costs, ensure better food quality and more supplier accountability.
Austerity Drive
An austerity drive by the government and “price deflation” in liquor, edible oil and rice has damped operations in China, Cheesewright said on a conference call in February. “The overall market in China remains challenged.”
The China business posted an operating loss in the fourth quarter ended Jan. 31, and sales expanded 3.7% while same-store sales rose 0.4%, Cheesewright said.
Wal-Mart plans to add as many as 110 stores over three years in China, while shutting some outlets and remodeling others, the company said Oct. 24.
In Japan, where Wal-Mart has more than 400 stores, it’s looking for a better return on investment, CEO Doug McMillon said in October. Same-store sales declined 0.5% in the year ended Jan. 31, while revenue in Japan rose 0.3 percent, Cheesewright said in February.
Wal-Mart dissolved a joint venture in India last year amid internal anti-corruption investigations. The retailer also sold its South Korean unit in 2006 after years of lackluster results.
Bloomberg
