Michael Duke will replace Lee Scott in February behind Scott revived the big-box retailer’s sales and share price, as well as his reputation

By Christopher Palmeri

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Talk in all parts of a festival take aback. Retail giant Wal-Mart Stores (WMT) announced just a week before Black Friday, the biggest sales sunlight of the year, that it would have a new principal executive officer come February. Lee Scott, the company’session CEO for the gone nine years, is stepping the floor. He’ll be replaced by dint of. Michael Duke, , 58, who currently leads the company’s international variance.

Retailers traditionally put on’t make such appointments right in the between the extremes of their biggest selling season. But longtime Wal-Mart watchers see the change because more of a victory lap than a forced exit despite the 59-year-old Scott, whose tenure had been marred by disappointing results and altercation until this year. "He’s dealt with the public relations, the vicious union attacks, he’s gotten morale back up—the most profitably action to bestow is leave at a moment of strength," says Howard Davidowitz, a retail consultant by his own firm in New York. "When you talk about management transition, this is similar to good as it gets."

Even long-term critics, such as the union-funded Wal-Mart Watch campaign, applauded the news, sort of. "Wal-Mart’s announcement must be viewed in the context of the recent distinction," the group related in a statement. "It represents an suitable for Wal-Mart to change from the low-wage, low-benefit business model to one that will be more appealing to some Obama Administration."

Wal-Mart’sitting reputation took a beating in novel years as critics complained of its skimpy employee pay and health-care benefits as well as big-box stores that decimated smaller hometown rivals. Moreover, the nation’session largest retailer seemed to lose its low-price focus, chasing designer wardrobe much like rivals Target (TGT) and Kohl’s (KSS). Investors were disappointed, too, as the company’s costly new store launches cannibalized sales at existing locations and Wal-Mart’s once soaring stock price was relegated to the bargain crib.

The sorry stripe began to vary this year, in part due to the slumping economy luring customers back (BusinessWeek, 10/30/08) for cheap prices. Yet that shift was moreover aided in part by changes the retailer made in the past two years. Wal-Mart has been opening fewer locations and smaller stores when it does. A store remodeling program introduced skylights, wider aisles, and warmer flag to Wal-Mart’s characteristically cold and cluttered layout. The company has also been editing its product assortment, focusing mostly on top sellers sold at rock-bottom prices. This holiday shopping season the chain is heavily promoting brand-name toys at $10 each.

As a result, Wal-Mart has been posting sales results sharply less ill than rivals in what is shaping up to be one of the worst sales years on record. Wal-Mart’s stock is up this year, a rarity in the current dull emporium. "This is Wal-Mart time," Scott told Wall Street analysts Oct. 27 during an annual presentation at company headquarters in Bentonville, Ark. "This is the character of environment that Sam Walton built this company for." Wal-Mart shares rose slightly, to 51, on the advice of Duke’s appointment.