It’s no secret that Walmart (WMT) and Target (TGT) have had a challenging year so far as sluggish sales, hotter competition and PR nightmares have weighed on WMT and TGT stock. When the going gets tough at publicly traded companies, top executives often get going — that’s why it comes as no surprise that Walmart and Target recently have shaken up the C-suite.
Target recently named former PepsiCo (PEP) executive Brian Cornell as its new CEO, taking over for Gregg Steinhafel, a 35-year TGT veteran who resigned in May after a misstep in its Canada expansion and a massive data breach in December compromised credit card numbers and personal information of as many as 40 million Target credit cardholders.
The impact of that data breach caused TGT to revise its second quarter guidance last week to 78 cents a share, down from the 85 cents to $1 per share it had forecast earlier. Target now expects to take a $148 million hit to settle claims related to the breach, including those from payment card networks. TGT said the costs would be partially offset by a $38 million insurance payment.
Last month, WMT announced that Walmart Asia CEO Greg Foran would take over the company’s critically important U.S. operations. Walmart has battled a series of scandals and PR disasters in recent months, ranging from a Mexican bribery investigation to the sale of tainted donkey meat in China.
But which leadership change has the best chance of overcoming recent scandals and restoring the big box retailers’ fortunes? Let’s break it down:
Walmart: Greg Foran, CEO, U.S. Operations
Foran takes over the Bentonville, Ark.-based company’s high-profile U.S. operations from Bill Simon. Simon, who had been CEO of U.S. operations since 2010 and served as chief operating officer from 2007 to 2010, is “transitioning out of the company,” according to a WMT news release. The move is logical because Simon had been a contender to replace Mike Duke, who was retiring as CEO of the entire company; however, Doug McMillon, who has close ties to the Walton family, got the nod in February. Foran, who hails from New Zealand, is a 35-year retail industry veteran who McMillon hired back in 2011 and promoted to head up Walmart’s China operations in March 2012.
Walmart’s U.S. division is the largest jewel in the Walmart crown, but the company has struggled with lower same-store sales and earnings misses over the past year. Foran, who once headed up Australian supermarket chain Woolworth’s grocery operations, has considerable strengths in supply chain management, marketing and merchandising.
He’ll need all that street cred and much more to transform WMT’s U.S. operations, which are feeling a trifecta of pain with digital commerce growth, competition from neighborhood dollar and drug stores, and sustained weakness in spending by lower-income buyers. Foran must find a way to make smaller-format Walmart Express stores a success, boost e-commerce sales and reinvent the big-box retailer’s flagging image and reputation.
Target – Brian Cornell, Chairman and CEO
By hiring PepsiCo’s CEO of Americas, TGT is bringing in an outsider to replace the ultimate insider, the 35-year TGT veteran Gregg Steinhafel.
In fact, not only is Cornell the first outsider to take the helm at TGT, he is a former Walmart veteran who turned the then-struggling Sam’s Club into a private-label powerhouse that could compete with warehouse rival Costco (COST).