CEO Who Led Wal-Mart’s Growth Steps Down

Wal-Mart Stores Inc. said David Glass, who expanded the discount chain beyond its rural roots into the world’s largest merchant, will step down as chief executive and president after 12 years. He will be succeeded by H. Lee Scott Jr.

Glass, 64, joined the retailer in 1976 and took over from founder Sam Walton in 1988.

Scott, 50, has been with Wal-Mart for two decades and is best known for his expertise in using logistics to squeeze costs.

Glass deployed Wal-Mart stores in suburbs and big cities across the U.S., dotting them with warehouse-size stores that combine groceries and brand-name goods. In recent years, he’s pushed into international markets, supermarkets and the Internet. Under Glass, Wal-Mart’s sales increased tenfold to an estimated $165 billion this fiscal year, and its shares surged 19-fold.

Glass is credited with helping develop the lucrative super centers, which combine a full grocery department with general merchandise. He also expanded the Sam’s Club chain of warehouse stores, which generates more than $20 billion in sales.

The succession of Scott, named vice chairman and chief operating officer a year ago, was expected, though the move was a little earlier than some investors and analysts had thought.

Rob Walton, who was chairman of the executive committee, will remain as board chairman. He is the son of Sam Walton, who died in 1992.

Scott will need to speed expansion abroad to maintain growth, investors said. The chain has spent billions since 1997 on acquisitions in Germany and Britain, and now operates in eight countries outside the U.S. with stores in Canada, Mexico, Europe, Latin America and Asia.

While its global acquisition spree isn’t over, Wal-Mart is now concentrating on building the distribution and price-cutting reputation that made it a leader in the U.S.

Glass tapped Scott in October 1995 to head the merchandising of Wal-Mart’s stores, and in 1998 appointed him to lead the Wal-Mart division.

Scott slashed $2 billion in inventory in two years, and stepped up the strategy of regularly cutting prices to draw more customers.

Scott also reorganized stores by studying shoppers. He learned that customers buy more if they don’t have to scour several aisles. Now, shoppers picking up luggage will find alarm clocks and travel irons nearby instead of in different areas.

Wal-Mart shares closed off 63 cents at $64.50 on the New York Stock Exchange.