Wal-Mart Appoints New COO in the Peak Holiday Season - Analyst Blog

Retail giant Wal-Mart Stores, Inc. (WMT) recently announced the appointment of Judith McKenna as the chief operating officer (COO) of the Wal-Mart U.S. division.

McKenna will succeed Gisel Ruiz, who has been appointed executive vice president of Wal-Mart's International People Division. McKenna will join the company immediately and will report directly to Wal-Mart U.S. president and chief executive officer, Greg Foran. Ruiz will also assume her responsibilities immediately and will report to Wal-Mart International president and chief executive officer, David Cheesewright.

McKenna was so far serving as the chief development officer for Wal-Mart U.S. She has an extensive retail experience of 20 years with Wal-Mart and has held various leadership positions in the company. She initially served as the chief financial officer and chief operating officer in its Asda leadership team in the U.K. Later she moved to Wal-Mart International as executive vice president of strategy and international development.

In her new role as the COO of Wal-Mart U.S., McKenna will be leading a team of 1.3 million associates. She will also be heading Wal-Mart's small format stores and will continue to develop new formats, expand Walmart services and integrate digital commerce into the retailer's existing U.S. stores.

The new COO of Wal-Mart U.S. is expected to employ strategies according to changing demand scenario in order to further improve operational efficiencies in the region and to take the division to the next level.

It is the second time in two weeks that Wal-Mart U.S. has had a major executive departure at the peak of the crucial holiday season. Last month, Wal-Mart U.S.' chief merchandising officer Duncan McNaughton, who was responsible for product selection in the stores, left the retailer.  

We note that Wal-Mart U.S. has grappled with declining comparable store sales in seven of the last eight quarters due to a challenging retail sales environment and difficult consumer spending. Low-income shoppers are squeezed between stagnant wages and reduced government food stamps.

In the recently reported third quarter fiscal 2015, Walmart's earnings came in line with estimates, while revenues were better-than-expected. The company however narrowed its earnings guidance for fiscal 2015, as the company anticipates a fierce competitive environment ahead of the holiday season. (Read: Wal-Mart's Q3 Earnings In Line, Sales Beat; View Narrowed).

Walmart also anticipates macro-economic headwinds like reductions in government benefits, higher taxes, tighter credit and higher group health care costs to impact fiscal 2015 results.

However, it is encouraging that gas prices have reduced, which should increase consumer spending power a bit. This may benefit the company and other retailers in the upcoming holiday season.

Walmart carries a Zacks Rank #3 (Hold). Some better ranked retailers include Ingles Markets, Incorporated (IMKTA), Safeway, Inc. (SWY) and The Kroger Co. (KR). While Ingles Markets sports a Zacks Rank #1 (Strong Buy), Safeway and Kroger hold a Zacks Rank #2 (Buy).