News broke this morning that Walmart’s Board of Directors has selected Doug McMillon, the current head of Walmart International, to succeed Mike Duke as CEO starting Feb. 1. McMillon, who also joins the Board of Directors effective immediately, will have his hands full right away with problems that Mike Duke hasn’t solved. What will this Walmart insider (who is reportedly close to the Walton family) have to contend with come the beginning of the next fiscal year?
- Escalating labor unrest: Walmart associates in Los Angeles, Seattle, Dallas, Tampa, Miami, Chicago, Pittsburgh, Cincinnati, Minneapolis, and Dayton, Ohio have all gone on strike this month, and more actions are reportedly to come. On Black Friday itself, associates and community supporters will hold 1,500+ protests outside Walmart stores nationwide. The company also got bad press last week when a photo showing an internal Walmart food drive for the company’s underpaid employees went viral online, as pundits and public figures—including actor Ashton Kutcher—slammed Walmart for its everyday low compensation. Rather than try to solve them, Mike Duke let Walmart’s labor issues accumulate, leaving Walmart’s PR department to craft an elaborate campaign to try to defend the quality of Walmart jobs.
- FCPA investigations: Yep, still going on. Despite hundreds of millions of dollars spent so far on investigations and compliance, nobody has yet been held publicly accountable for their role in either the alleged bribery or the subsequent cover-up, even though executives including Rob Walton and Mike Duke were made personally aware of the bribery allegations in Mexico.
- The failure of the productivity loop: The ongoing operational difficulties—and earnings weakness—in Walmart’s U.S. division are well-documented. As we have said, these problems represent a failure of Walmart’s vaunted “productivity loop.” Despite Walmart brass’s proclamations that the company’s in-stocks and inventory problems are solved, that appears not to be the reality on the ground. (Also: Is trouble at Walmart U.S. why Bill Simon, head of that division, got passed over for the CEO job though he was once considered to be the leading candidate?)
- The e-commerce challenge: After years of underinvesting in e-commerce, Walmart’s now struggling to catch up to Amazon and other retailers that have found success online. The company’s challenges in e-commerce are not just investment-oriented: There are documented operational problems and apparent corporate culture clashes having a negative impact on Walmart’s e-commerce business.
Be sure to send Doug McMillon not only your congratulations, but your good luck wishes as well. With Mike Duke having kicked Walmart’s laundry list of trials and tribulations down the road, he’ll need them.