For Exiting Wal-Mart CEO, a Victory Lap

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Duke joined Wal-Mart 13 years ago after stints at the Federated and May Co. department store chains, and much like Scott, worked his way up in the company's famously efficient logistics department. Since 2005, Duke has headed Wal-Mart's international business, with 3,200 stores and $100 billion in sales. He has faced some thorny decisions, such as exiting poorly performing South Korea and Germany, while bulking up in Latin America. Duke has indicated that he will shift more of Wal-Mart's new-store focus to faster-growing emerging markets. "Wal-Mart has reached the point of diminishing returns in the U.S.," says Donald Delzell, head of the retail consulting firm Future Merchants. "Continued growth is based on international expansion."

Talking Turkey

Duke's appointment is disappointing news for two other executives considered candidates for the top job: Eduardo Castro-Wright, 53, president of the U.S. stores division, and C. Douglas McMillon, 41, who runs the company's Sam's Club warehouse chain. As part of the Duke announcement, Castro-Wright was promoted to vice-chairman, responsible for the company's worldwide procurement. Scott will remain as an advisor to Duke, and give speeches on behalf of the company.

Left unanswered is who will replace Duke. Wal-Mart said it would name Duke's successor by the close of its fiscal year in January 2009. Knowledgeable observers say the leading candidate is McMillon, the Sam's Club chief. "He's really helped drive growth in that business," says Joe Feldman, a managing director at Telsey Advisory Group, a retail consultancy in New York. Sales at Sam's Club were up 6.7% in fiscal 2008, while operating income rose 9.3%. A company lifer, McMillon launched his Wal-Mart career back in high school in Jonesboro, Ark. The one hole in his résumé is a lack of international roles: "My gut feeling is they want to give McMillon broader experience," says Feldman.

Duke also has two well-regarded lieutenants who would figure to be in the running: Craig Herkert and Vicente Trius. Since 2004, Herkert has been president and CEO of the Americas, which includes the retailer's operations in Argentina, Brazil, Canada, Mexico, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Puerto Rico. Trius, meanwhile, joined Wal-Mart in 1996 and currently runs Asian operations, and earned his stripes by growing Wal-Mart's Brazilian business from a 10-store outpost to a thriving unit with more than 300 outlets.

Of course, the internal politics matter little to customers such as Richard and Katherine Jordan, retirees from Arcadia, Calif., who recently were buying 10 turkeys at their local Wal-Mart for a church dinner. "You can't beat their prices," Katherine Jordan said. "At $1.10 a pound, they're cheaper than what the other stores are charging. And these are Butterballs."

Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau. With Matthew Boyle in New York