Wal-Mart suppliers lack confidence in CEO Duke, survey shows

The majority of Wal-Mart Stores Inc. suppliers say Chief Executive Officer Mike Duke and his managers aren't explaining their business plans clearly enough, according to a survey.

More than half the 139 suppliers surveyed in a study by recruitment firm Cameron Smith & Associates said they did not agree that "senior leadership is aligned behind a strategic vision that is consistently communicated and well understood by the supplier community."

The Rogers, Arkansas-based group conducted the survey in October and November over about three weeks.

The vendors also said dollar stores like Dollar General Corp. and Family Dollar Stores Inc. posed the single biggest threat to Wal-Mart over the next five years, followed by Target Corp, Kroger Co. and Amazon.com Inc. Drug chains CVS Caremark Corp. and Walgreen Co. were next, followed by Costco Wholesale Corp.

"That really surprised me," said Cameron Smith, founder of the recruiter, which works with Wal- Mart suppliers in and around its Bentonville, Arkansas, headquarters. Smith said. "I expected suppliers to say that Target was the No. 1 threat."

To win back shoppers, Duke and new U.S. stores chief Bill Simon changed tactics this year and began restoring to shelves thousands of products removed during the tenure of former merchandising chief John Fleming. They aim to reverse six consecutive quarters of declining sales at U.S. stores open at least a year, with Duke, 61, projecting "positive" sales for the current period.

"They are rather frantically returning to past practices by bringing back products and going after their core low-income shopper," said Leon Nicholas, Cambridge, Massachusetts-based director at consulting firm Kantar Retail, which works with Wal- Mart suppliers. "The big question for a lot of our clients seems to be, 'Is this going to work?' So far, it doesn't seem to be working.''

Greg Rossiter, a spokesman for Wal-Mart, declined to comment.

Duke has overhauled his management team since taking the helm in February 2009. In June, Simon replaced Eduardo Castro-Wright, who is now running global sourcing and e-commerce, and Charles Holley succeeded Tom Schoewe as chief financial officer Nov. 30. Fleming's role was split between four senior merchandising executives, and apparel chief Dottie Mattison resigned in July.

DOLLAR STORES' GAINS

"I hope Mike Duke takes a lesson from this survey," said Cameron Smith. Smith conducted the survey along with Connecting Northwest Arkansas, a trade publication.

More than half the suppliers deemed "adjusting to shifting personnel" an area of "great concern," according to the survey. Half of the respondents said they have worked with Wal-Mart for a dozen years or more.

Wal-Mart shares, as of 1:10 p.m. dropped $0.60 or 1.12 percent to $53.80. in New York Stock Exchange composite trading. The shares had advanced 1.8 percent this year through Dec. 17, compared with a 37 increase for Dollar General. Target had risen 21 percent over the same period, while Amazon had gained 32 percent.