Great Scott! New CEO

Meet the new boss, same as the old boss

The resignation of David Glass, the man who turned a small-town chain of discount stores into the world’s biggest retailer, has left a new generation of younger leaders at the head of Wal-Mart Stores Inc. But that may mean few changes in the way Wal-Mart does business.

Glass, 64, has been the only person to run the company besides founder Sam Walton, who died in 1992.

Lee Scott, 50, was named CEO and president Jan. 14. Scott became chief operating officer and vice chairman a year ago after working for 16 years in the company’s logistics operations and three years in merchandising.

Glass, who is stepping down several months earlier than expected, has lined up other leaders at Wal-Mart who are all about 50 years old. They include: Thomas Coughlin, head of Wal-Mart Stores; John Menzer, head of international operations; Randy Mott, chief information officer; and Thomas Schoewe, chief financial officer.

Some analysts believe the new generation of leaders will have more freedom than Glass, who was operating in Walton’s shadow.

“I think the biggest difference [between Glass and Walton] is Sam created a brand,” says Eric Segal, president of Kenzer Corp. in New York City, which has handled executive searches for Wal-Mart for the past 18 years. “He was a personality. If you’ll remember, he danced the hula on Wall Street. You can’t compete with Sam Walton.”

But Walter Loeb, who runs the New York-based retail consulting firm Loeb Associates, says little will change with the new regime because most of the new leaders at Wal-Mart — including Scott — had worked for Sam Walton.

Loeb says Scott had been in training for the CEO position for several years. Wal-Mart shifted him from logistics to store management five years ago to give him training in different aspects of the company, Loeb says.

“I think it will be a seamless transition for a man who has worked in the shadow of David Glass for some time,” Loeb says.

Glass legacy

Glass will become chairman of Wal-Mart’s executive committee. That role was previously held by Rob Walton, Wal-Mart’s chairman and Sam Walton’s son.

Glass reportedly plans to make a bid to buy the Kansas City Royals professional baseball team. The Associated Press reported on Jan. 14 that Glass said he “would like to complete the purchase of the Royals as soon as possible.”

AP reported in November that Glass said he had promised Royals’ founding owner Ewing Kauffman that he would buy the team and keep baseball in Kansas City. Glass is the obvious favorite as team owner. Another suitor, Miles Prentice, a New York lawyer, gathered 40 investors and offered $75 million for the team last year, but his bid was soundly rejected by baseball team owners in a 29-1 vote in September.

After years of wooing by Walton, Glass left a Missouri drugstore chain to join Wal-Mart in 1976 as vice president of finance.

In 12 years under Glass as CEO, Wal-Mart’s revenue has grown by tenfold to about $165 billion for the fiscal year that will end Jan. 31. For the fiscal year that ended Jan. 31, 1999, sales at Wal-Mart’s 3,600 stores totaled $138 million, which exceeds the gross domestic product of Denmark.

When Glass took over in 1988, Wal-Mart had 1,200 stores and was the nation’s third-largest retailer.

Now, the company operates more than 2,485 Wal-Mart discount stores and 456 Sam’s Clubs wholesale stores in the United States, plus about 1,000 stores around the world.

One of Glass’ greatest achievements was taking Wal-Mart out of middle America and making it a global brand. Wal-Mart is now poised to overtake General Motors as the nation’s largest company. The first Wal-Mart opened in Rogers in 1962. Walton and his brother, James “Bud” Walton, saw a demand for discount stores in small towns that weren’t being served by larger chains.

The Waltons offered low prices and customer service like no company had seen before. Now, more than 100 million people shop at Wal-Mart each week, and the company employs about a million people.

Besides expanding Wal-Mart to markets across the United States and the world, Glass is credited with helping build Wal-Mart’s inventory and distribution systems.

Vendors can exchange invoices and purchase orders with Wal-Mart electronically. Stores are linked to the company’s headquarters by satellite, allowing them to replenish and reorder inventory only when needed.

With the advanced technology, Wal-Mart can position items in its stores to achieve the best sales or quickly transfer them to stores where they will sell.

Under Glass, Wal-Mart developed its successful supercenter concept, expanded Sam’s Club stores and launched Neighborhood Markets. The mammoth 200,000-SF supercenters are a combination of discount and grocery store. The 40,000-SF Neighborhood Markets are stand-alone grocery stores that can be located in cities where land is unavailable for larger stores.

The resignation of Glass has apparently had little effect on Wal-Mart’s stock price.

Scott background

Scott began his career in 1979 in the logistics department and eventually helped build the company’s distribution centers.

Scott also helped Wal-Mart develop its hub-and-spoke distribution network, making sure all Wal-Mart stores are within a day’s drive of a distribution center.

Wal-Mart’s logistics and distribution system is considered the best in the retail world, and Scott’s rise to CEO signals the importance of logistics and technology in Wal-Mart’s success.

In 1995, Scott moved into the merchandising and store side of the business as executive vice president of merchandise.

In 1998, he was named president and CEO of the Wal-Mart stores division, taking on responsibility for the company’s Wal-Mart stores, its Sam’s Club warehouse division, and its international divisions.

Scott currently serves on the board of directors for Wal-Mart Stores Inc., and the board of Cooper Industries Inc.

Scott was born in Joplin, Mo., and graduated from Baxter Springs High School in Baxter Springs, Kan.

He received his bachelor of science degree in business from Pittsburg State University in Pittsburg, Kan., and was named outstanding alumni in 1995. He has also completed the executive development programs at Penn State University and Columbia University.