Surviving In The Market
Surviving In The MarketCan Wal-mart get the magic back? In the four years since Wal-mart's founder died of bone cancer, CEO David Glass has invested billions of borrowed dollars in businesses that have earned relatively low returns. Glass, age 60, seemed to be a good choice for CEO when Sam Walton, at 69, tapped him to take over in 1988. Investors have knocked down Wal-Mart's market value by $7.7 billion since the day Sam died. Sam built it from nothing to $59.3 billion.
In the past year, key executives, particularly Sam's favorites, have left behind Wal-Mart to pursue jobs elsewhere. The biggest shocker came at the end of March when Bill Fields, Glass's heir apparent, told his boss he was quitting to become CEO of Blockbuster Entertainment. Fields headed Wal-Mart's main operations and was the company's closest link to the glory days. A hometown boy born and bred in Bentonville, Arkansas, Fields was hired by Sam straight out of the University of Arkansas 24 years ago. He became a sort of surrogate son, and was generally considered to be Wal-Mart's star manager in operations and merchandising. Fields earned $590,000 a year to run a $68 billion business at Wal-mart. At Blockbuster, which revenues about $3.3 billion, Fields is expected to make much more. Yet, Fields insists money wasn't the issue for leaving. Field's archival, Sam's Club President Dean Sanders, quit last fall. Wal-Mart's two most likely candidates for CEO are gone which puts Wal-Mart's future more in the hands of Glass.
Glass has lifted Wal-Mart's long-term debt from $1.7 billion in 1992 to $8.5 billion. Glass plans to make Wal-Mart America's largest grocer by saturating the country with "super centers," emporiums that combine a supermarket and general-merchandise store under one roof. Sam lived to see Wal-Mart open only a few super centers. But right after he died, Glass Cranked up the spending and in four years has expanded...
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