Wal-Mart’s $3.3 billion pending acquisition of Jet.com includes new leadership for the retail giant’s e-commerce business in the coming months, according to Wal-Mart Stores CEO Doug McMillon.
McMillon said during a conference call with the media on Monday (Aug. 8) the timing was right for Jet.com founder and CEO Marc Lore to eventually assume control of Wal Mart’s e-commerce brand and business in addition to running Jet.com. Neil Ashe is now the CEO of Walmart.com.
“We are thankful for the progress Neil Ashe has made running and growing the business … re-platforming, nearly doubling the GMV (gross merchandise value) of our online offerings, building a winning e-commerce team but now there is a natural inflection of leadership change,” McMillon said during the call.
He did not say when Ashe would step down, but did say that Lore will eventually take over the leadership and his salary and compensation package would be detailed in Proxy filings at a later date. He said Lore is eager to manage the Walmart.com brand. He also told reporters there would be no updated guidance and he didn’t respond to the question asking if the deal would impact the rate of share repurchases in the coming years. The company will report fiscal second quarter earnings on Aug. 18.
“We have some bandwidth within the company at this time. We will update share purchases at a later date,” he said.
McMillon conducted the phone conference from San Bruno, Calf., where he held a town hall for Walmart.com employees earlier in the day. He said it’s not unusual for Walmart to operate multiple brands in a market as they own and operate 50 brands around the world.
Walmart.com and Jet.com will operate independently once the deal is approved and completed. He said Walmart customers won’t see any changes in the short term. He said the company will continue to execute its game plan for the holiday season and then the two companies will begin to integrate and combine some of their efforts.
“We are taking this at a smart pace. Some of the timely work involves the tech platforms,” McMIllon said. “We are hoping Walmart customers will go online and checkout Jet.com, but for now they remain separate.”
McMillon said this is a long-term game plan to win with the customer. He said Walmart U.S. is pleased with progress in its supercenter business and the Jet.com deal is complementary to its agenda to win long term. He said Lore is a proven e-commerce success and his mindset about how to give customers what they want matches the Walmart.com strategy.
He said Lore’s model puts the customer more in charge of the price they pay with the “smart cart” features that gives an option for return privilege on an item. He also said Lore’s model is also an insightful way that allows customers to build a basket.
“Walmart has been a stock up and basket business for a long, long time,” he added. “Lore’s focus has been more on millennial and urban consumers. We have a large millennial client base but one that is different from Jet.com. Also Jet has been able to attract brands that we don’t have at Walmart,” McMillon said. “We hope to keep the focus on both brands independently but also leverage some things on the backend. The essence of those brands (Jet.com and Walmart.com) will remain different over time.”
Analysts say Lore is a major talent score for Wal-Mart. He’s a former Amazon executive, who left that e-tailer to launch Quidsi which he sold to Amazon in 2010 for $540 million – a deal in which Wal-Mart also pursued.
However, some analysts wonder how long Lore, a serial entrepreneur, will be able to work in a corporate bureaucracy like Wal-Mart. McMillon said early talks with Lore suggest that Lore is eager to apply his talents to Walmart.com and continue innovating for both brands. He said with Jet.com using the strengths of Walmart to reduce logistics and sourcing costs, Jet.com could see profits much faster than otherwise.