By Nicole Maestri
NEW YORK (Reuters) - Wal-Mart Stores Inc
The retailer also promoted Eduardo Castro-Wright, 53, a rising star who heads its U.S. operation, to vice chairman, effective immediately.
The surprise announcement on Friday, landing one week before the crucial Thanksgiving holiday shopping weekend, comes as Wal-Mart builds upon its strength as a discount retailer in a contracting U.S. economy.
It also comes as the retailer has increasingly looked to overseas markets to fuel expansion as U.S. growth has slowed.
"I think it's good. I'm happy to see it," said Joseph Feldman, a retail analyst with Telsey Advisory Group in New York, of Duke, 58, the incoming CEO.
Feldman said the timing of the announcement was "a little strange," but recalled that at Wal-Mart's analyst meeting in October, there was almost a sense that Scott was saying farewell, and "finally had the upper hand over Wall Street."
He said Castro-Wright's promotion could also signal the executive as a future CEO candidate.
The CEO change is effective February 1, 2009, Wal-Mart said.
"We are confident that the strategy we have in place is the right one for future success and Mike has been actively involved in developing and executing this strategy," said Wal-Mart Chairman Rob Walton, a member of the company's founding Walton family.
Other analysts said the succession plan comes as Wal-Mart has gotten back on track, boosting profits at the expense of rivals by persistently focusing on low prices.
"Wal-Mart is pushing well over $400 billion in sales," said Thomas Nyheim, portfolio manager at Christiana Bank & Trust. "Their business model is probably the only one that's working.
ROCKY TENURE
Scott, 59, has served as CEO for more than eight years, with much of his time at the helm of the retailer marked by struggles and a stagnating stock price.
When the U.S. economy was roaring along, Wal-Mart found itself losing out to trendier stores such as Target Corp
A foray into fashion and higher-end merchandise failed to draw wealthier shoppers, and its profit took a hit last year when it cut prices to clear out poor-selling merchandise. Some company-watchers even thought at the time that the missteps could cost Scott his job.
But Wal-Mart has returned to its low-cost roots and reined in U.S. expansion, which has paid off as the economy soured and cost-conscious consumers come back to its stores.
Scott, who joined the company in 1979 as an assistant director in the logistics division, has also tried to portray Wal-Mart as a world leader that is committed to tackling tough issues like soaring health-care costs and cleaning up the environment.
Scott will remain chairman of the executive committee of the board, and will be employed through January 31, 2011.
Before overseeing Wal-Mart's international unit, Duke was the head of Wal-Mart's U.S. operations. He joined the company in 1995 as the senior vice president of logistics, later becoming the company's executive vice president of logistics.
Wal-Mart said it will announce a new head of international operations by the end of January, when its fiscal year concludes.
Wal-Mart shares rose 66 cents or 1.3 percent to $51.32 on Friday morning on the New York Stock Exchange trade.
(Additional reporting by Deepa Seetharaman, editing by Jeffrey Benkoe and Matthew Lewis)
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