Everyday low expectations

Walmart CEO choice acknowledges glum reality

Walmart's choice for chief executive acknowledges a glum reality: the mega-retailer is no longer the disruptive force it used to be. Replacing retiring Mike Duke with veteran insider Doug McMillon avoids the upheaval that some rivals have invited by hiring outsiders. Yet, it also heralds nothing radical in the fight against Amazon and others for online customers. The discounter looks resigned to its role as a plodding behemoth.

Though the timing keeps with an odd Walmart tradition of announcing new CEOs just ahead of the biggest US shopping day of the year, this time feels a little different. For one thing, the Bentonville, Arkansas-based company is grappling with sluggish growth. Sales at stores open for more than a year slumped in the third quarter.

Broader performance under Duke, who took over almost five years ago, has been reasonable. Walmart's annualised total shareholder return since February 2009 clocks in at about 14 per cent, according to Thomson Reuters data. That's better than at JC Penney or Sears, where new leadership failed to turn around disappointing results, but also lags Costco's 27 per cent and Amazon's runaway 47 per cent over the same period.

By most indications, the 47-year-old McMillon should be well positioned to sustain the middling achievement. As head of Walmart's international division, and before that its Sam's Club members-only chain, he is a safe pair of internal hands. McMillon also will be deeply knowledgeable about, and thus suitably able to navigate, the company's persistent worker pay battles and ongoing investigations into overseas bribery allegations.

While Walmart stock is trading at an all-time high, its rise hasn't kept pace with the S&P 500 Index. Shareholders probably can't expect that any more from Walmart. With sales expected to approach $480 billion this year, the company is too big to see the next shop around the corner. With the CEO appointment, at least the board of directors seems to appreciate Walmart shouldn't try to be anything other than what it is.