Wal-Mart streamlines units WSJ

Wal-Mart streamlines units WSJ


Wal-Mart Stores Inc. (WMT) is consolidating its U.S. realty, store operations and logistics divisions, which will operate under three geographic business units, as the world's biggest retailer aims to improve efficiency and lower operational costs.

Wal-Mart said Thursday it plans to break up its U.S. business into North, South and Western regions, each of which would have its own real estate teams to scout and build new stores, and merchandising teams to fine-tune the mix of products sold to suit local tastes. The new model more closely resembles the company's international operations, which are headed by country presidents with similar teams working underneath them.

"This is consistent with what they have been doing on the merchandising side as they have sharpened their focus on the specific needs of the local consumer," said Sarah Henry, retail analyst with MFC Global Investment Management.

Taking broad strokes makes sense, since "when you have a mature retailer, your focus is on bringing out productivity per square foot," Henry said. "This a good use of their analytic power."

Wal-Mart "is always looking for ways to be more efficient and this seems like a logical step," said Peter Wood, a senior vice president who follows retail companies at Chase Investment Counsel, a money management firm.

Wal-Mart's U.S. stores chief, Eduardo Castro Wright, who will oversee all three new regions, wrote in another memo the new structure would "facilitate our growth as we seek to enter new markets."

He suggested that the regionalized approach would lead to different new store formats around the country. The company is aligning its store planning team with a customer experience team, a move that "will also support our efforts to accelerate our speed to market with new formats," Castro Wright said.

Rosalind Brewer has been named an executive vice president and president of the Southern region. Previously, she was president of the Southeast division for Walmart US.

Hank Mullany has been promoted executive vice president and president of Walmart North. He was previously president of the Northeast division of Walmart US.

Eric Zorn, president of Walmart Realty, and Johnnie Dobbs, executive vice president of logistics, will remain in their positions, with their roles expanded as the operating groups are aligned, the company said.

As of Feb. 1, Wal-Mart is transferring the responsibility for store merchandising from its market team to zone merchandise supervisors, a move that will cause the elimination of market team jobs. Wal-Mart did not disclose the number of jobs being lost.

Wal-Mart is also aligning its Puerto Rico business with that in the U.S. as a way of leveraging its U.S. buying power.

The moves follows Wal-Mart's announcement on Sunday that its Sam's Club division would lay off 11,200 workers as it restructures its in-store demonstrations unit.

Wal-Mart shares closed down 1.5% to $52.61, and were unchanged in late trading.