When Wal-Mart's David Glass succeeded revolutionary retailer Sam Walton, he had big shoes to fill. Now he leaves behind his own corporate size 17s.
Wal-Mart Stores Inc. said yesterday that Glass, who increased sales at the world's largest retailer by almost tenfold, will step down as the company's chief executive and president, effective immediately, although he will remain with Wal-Mart as chairman of the executive committee of its board of directors for at least a year.
Glass's successor is 50-year-old H. Lee Scott Jr., a 20-year veteran of Wal-Mart who has served as its chief operating officer and vice chairman for a year. Scott has already made his mark on the company, turning around its discount store division in the 1990s.
"It was an astounding performance for a company that large," said Michael Exstein of Credit Suisse First Boston. First as vice president of merchandise and later as president and chief executive of the Wal-Mart Stores division, Scott "did in three or four years what General Motors has been trying to do for decades, to turn the battleship around," Exstein said. Scott reduced bloated inventories and lowered costs in the division.
During his years at the helm, Glass, 64, saw the company's revenue grow from $16 billion a year to an estimated $165 billion in the fiscal year that ends Jan. 31, 2000. Wal-Mart Chairman Rob Walton, son of the founder, said Glass "strengthened Wal-Mart by developing and leading a team of strong managers who helped establish new lines of business, embraced technology and spearheaded international growth."
According to industry analysts, Glass helped perfect the Wal-Mart Supercenter, which sells a full line of groceries as well as general merchandise. He also helped the company expand abroad; it now has operations in Brazil, China and Britain, among other countries, in addition to the more than 2,485 stores and 456 Sam's Clubs it operates in the United States.
Last month Wal-Mart, which is based in Bentonville, Ark., and America Online Inc. announced a deal to create a low-cost service that will be targeted at customers in small towns and rural areas who may not have affordable Internet access. And earlier this month Wal-Mart and Accel Partners, a venture capital firm, said the two companies will spin off Wal-Mart.com as an independent company. Wal-Mart will remain its majority shareholder.
Credit Suisse's Exstein said yesterday that Wal-Mart hasn't gotten into e-commerce seriously yet. "Wal-Mart never ever initiates anything. They wait for that teething period of industry development and then put their full weight into it."
Scott has spent most of his professional career working in logistics at Wal-Mart, helping to make its distribution system effective. His jobs have included vice president of transportation, vice president of distribution and senior vice president of logistics.
Wal-Mart's stock closed yesterday at $64.50, down 62 1/2 cents.
CAPTION: Wal-Mart CEO David Glass, left, will be replaced by 20-year Wal-Mart veteran Lee Scott, above.