Wal-Mart seeks efficiency in new U.S. structure

SAN FRANCISCO Thu Jan 28, 2010 7:17pm EST

SAN FRANCISCO (Reuters) - Wal-Mart Stores Inc (WMT.N) is consolidating some U.S. operations and dividing the country into three regions under separate presidents to increase efficiency at more than 3,700 domestic stores.

The world's biggest retailer is also creating a new division called Global.com to oversee its global e-commerce business.

Wal-Mart, which slashed prices online aggressively during the holiday season to gain market share and challenge Amazon.com Inc (AMZN.O), said on Thursday that Wan Ling Martello has been promoted to chief operating officer of Global.com. She was previously CFO of Walmart International.

Raul Vazquez, who was the CEO of Walmart.com U.S., is taking on a new role as president of Walmart West and the retailer said it will not fill his position.

The myriad changes come nearly one year after Mike Duke became Wal-Mart's CEO, taking the helm on February 1 from Lee Scott, who retired from the role.

At its analyst meeting in October, Duke said Wal-Mart was determined to become more efficient and cut costs, allowing it to offer lower prices, which would in turn drive sales.

To that end, Wal-Mart said on Thursday it is consolidating its logistics, real estate and store operations, now all to be overseen by Bill Simon, its U.S. chief operating officer.

Andy Barron will oversee store merchandising execution, which will design merchandise strategies for its three new U.S. geographic business units: Walmart West, Walmart South and Walmart North.

Each unit will have its own president, who will be able to run the business in response to local market demands.

Eduardo Castro Wright, who oversees Wal-Mart's U.S. operations, said in a memo that the structure would "facilitate our growth as we seek to enter new markets and develop new segments across the U.S."

The retailer said it will take a fourth-quarter charge of 4 cents per share for the restructuring and previously announced plans to close 10 money-losing Sam's Club stores and cut 12,700 jobs in its warehouse club division.

NEW STORES, BETTER MERCHANDISE

Wal-Mart expanded its massive discount stores across the country by following its "stack-it-high and sell it cheap" strategy. But facing saturation in many suburban U.S. markets, the retailer is now trying to develop smaller stores better suited for densely populated urban locations.

Under the structure outlined on Thursday, each region will have a real estate team dedicated to determining the best locations to build new stores or studying new store formats that might be suitable for the local market.

Regions will also work with merchandising teams to stock items that match local tastes. Wal-Mart, which is trying to retain the market share it gained during the downturn, has acknowledged a one-size-fits-all approach no longer works.

"The big question mark is are they going to be able to keep these trade-down customers ... and this is a way to ensure that it does become a better place to shop," said Angie Lessuise, an analyst with Telsey Advisory Group, of the new structure.

Earlier on Thursday, Wal-Mart announced a $2 billion sourcing deal with Li & Fung Ltd (0494.HK), which it said should help drive "significant" savings across its supply chain.

Wal-Mart named Rosalind Brewer president of Walmart South, while Hank Mullany was promoted to president of Walmart North.

Wal-Mart shares closed down 79 cents, or 1.5 percent, at $52.61 on the New York Stock Exchange.

(Reporting by Nicole Maestri; editing by Robert MacMillan, Gary Hill and Andre Grenon)

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