Walmart faces a new challenge: CEO who has led for more than a decade unexpectedly announces resignation at a critical time

On Friday the 14th Eastern Time, Walmart, the world’s largest retailer, made a surprising announcement: CEO Doug McMillon, who has led the company for over a decade, will step down at the end of January next year. This move comes as the company faces multiple challenges, including tariff shocks, weak consumer demand, and AI technology disrupting the retail industry. The personnel change caught the market off guard.

Following the news, Walmart’s stock opened lower on Friday, falling about 3.6% at its intraday low, but continued to pare losses throughout the day. By midday, the drop was less than 1%, but the stock was still set for its second consecutive day of declines, marking a one-week closing low.

In regulatory filings, Walmart stated that McMillon will leave on January 31, and 51-year-old John Furner, CEO of Walmart U.S., will assume the role on February 1, becoming the fifth CEO since founder Sam Walton. McMillon will remain as advisor to the company until January 2027.

Under McMillon’s leadership, Walmart’s total shareholder return soared over 400%, market value grew $576 billion, and annual revenue topped $680 billion. Analysts believe changing leaders when the company is performing at such a high level represents both opportunity and challenge for the successor.

Chairman Greg Penner stated Furner is "the right choice to lead Walmart into a new era of growth and transformation." In a letter to employees, Furner expressed gratitude for McMillon’s contributions but said his current focus is leading the U.S. business through the holiday sales season.

CEO Succession Timeline Set

Walmart’s filings show that McMillon informed the board of his retirement intention on Tuesday, and the board voted on Thursday to appoint Furner as the new CEO. McMillon will officially step down on January 31 next year, at the end of the current fiscal year, and stay on the board until next spring.

The announcement comes just six days ahead of Walmart’s quarterly earnings. As of Thursday’s close, Walmart shares are up 13% this year, boosted by growth in the digital business and increased appeal to high-income shoppers.

Though rumors of McMillon’s retirement have surfaced from time to time over the years, the Wall Street Journal reported in 2023 that he planned to stay for another three years, but the company had not recently indicated a CEO transition was imminent.

Furner Takes Over: The Rise of a Walmart Veteran

Furner has served as CEO of Walmart U.S. since 2019, managing over 4,600 stores and the company’s largest business division. He joined Walmart in 1993 as an hourly worker, later serving in leadership roles in merchandising, operations, and supply chain. His father was also a Walmart executive.

In a letter to employees, McMillon said Furner’s experience gives him a unique blend: care for employees and a sharp sense of innovation. This balance and belief in company values, McMillon said, will help Furner "lead our people with vision and experience into the retail new era driven by innovation and AI."

Like McMillon, Furner attended the University of Arkansas, is deeply immersed in Walmart’s culture, and has close ties to the Walton family. The Walton family holds two board seats and considerable equity. Insiders say, however, that unlike McMillon’s gentle management style, Furner is known for a more forceful leadership approach and actively embraces new technologies and concepts, sometimes sparking internal controversy.

Furner also held executive posts at Walmart China and Sam’s Club, giving him a diverse business perspective.

McMillon Era Transformation Achievements

McMillon, 59, became CEO in February 2014 when Walmart was struggling: sales were stagnant, management doubted the company’s growth potential, employee satisfaction was low, and store operations were chaotic. Walmart also faced stiff competition from online retailers like Amazon, and the future of big-box stores was uncertain.

After taking office, McMillon launched strategies to raise hourly wages and increase investment in stores and digital transformation to fend off Amazon’s challenge. In 2016, he led Walmart’s $3.3 billion acquisition of e-commerce startup Jet.com, appointing its founder Marc Lore to head U.S. e-commerce operations. Walmart’s online sales took off, although many initiatives from that period, including Jet.com itself, were eventually shut down.

During his tenure, McMillon strengthened Walmart’s digital capabilities but, more crucially, realized the need to shore up the core U.S. retail business. He doubled down on improving customer service in stores and raising employee pay to enhance the shopping experience, helping Walmart attract more high-income customers during the 2022 inflation surge. He also recognized Sam’s Club’s potential to fend off Costco’s market share erosion.

As a company veteran, McMillon also knew which businesses didn’t work. He divested non-core assets, such as selling the majority stake in U.K. business Asda. In recent years, he has launched a Prime-like membership program, Walmart+, and a retail media business that sells ad slots to suppliers and sellers to boost profitability. He has also placed AI at the center of future strategy.

Despite some missteps, such as a glut of unsold inventory three years ago, Walmart recovered faster than rivals like Target facing the same problem. In his letter to staff, McMillon wrote: "Sometimes people doubt us; they underestimate how much you care and your ability to change."

The New Boss Faces Tough Tests

Furner is taking over a company in high gear, but that’s not always a comfortable position for a successor. Walmart’s core customers are under pressure from tariff-driven inflation and potential government shutdowns. As they have to pay more for necessities, they may cut back on purchases, especially higher-margin goods like apparel and home goods.

Other threats also loom. Although McMillon has made Walmart a formidable challenger to Amazon, their battle is far from over. In August last year, Amazon announced a major expansion of its grocery delivery business, potentially striking at Walmart’s core. The rise of AI will also disrupt shopping as the internet did two decades ago.

McMillon has already laid the groundwork for the tech race. Last month, Walmart announced consumers can directly buy Walmart products in OpenAI’s ChatGPT. It’s a good first step, but Furner must avoid repeating missteps from Walmart’s early e-commerce phase.

Beyond technological advances, a more traditional threat cannot be ignored: German discount retailer Aldi is expanding in the U.S. The company now operates about 2,500 stores and aims to reach 3,200 by 2028. Even as Furner focuses on AI, he can’t overlook this powerful competitor.

In a recent interview, McMillon said Walmart now pays wages higher than the retail sector average, is no longer near the bottom, and offers more benefits. Yet the company still faces criticism from politicians such as Senator Bernie Sanders, who argue Walmart hasn’t shared profits adequately with hourly workers through pay and benefits.

Last month, McMillon said the search bar has long been the way consumers browse and buy online, "but that’s about to change." He also said AI "will literally change every job." That’s why Walmart recently hired an AI acceleration leader.

As the head of U.S. operations, Furner is expected to have a handle on all these issues. But as McMillon learned while transforming Walmart, the old saying still applies: "Retail is detail." As Walmart gets ready for another sweeping transformation, his successor must do the same.

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