Walmart recently announced a few major personnel changes, one of which involves the appointment of a new CFO, Brett Biggs, a 47-year-old who previously was CFO and executive vice president of the company’s international business ventures. Biggs replaces Charles Holley, who is set to retire from the position and the company by the end of the year. Holley is scheduled to remain on staff until that time, helping Biggs adjust and transition to the role.
Walmart’s Questionable Accounting Practices
The major change comes at a curious time in Walmart’s lengthy and sometimes troubled business history. Just in the past few months, Walmart reported finding weaknesses in their accounting practices, specifically on how the company accounted for leases. Walmart addressed the issues in their quarterly filing report, stating that the Chief Executive Officer and Chief Financial Officer concluded that, “disclosure controls and procedures are not effective at a level that provides reasonable assurance.”
While the discrepancies, once corrected, most likely will not have a major effect on the company’s overall profit reports, another complication involving the financial department makes Biggs’ new role perhaps a bit more difficult. Walmart was accused of using bribery to grow its business in countries like India and Mexico. Though the criminal probe resulted in far less evidence than some expected, the company is still likely to face fines on foreign bribery charges by the U.S. Justice Department. Between straightening up the accounting and dealing with bribery scandals, is Biggs up to the job?
The company was also recently investigated for labeling many products “Made in the USA” even though the parts were manufactured elsewhere. Truth in Advertising, a consumer-focused watchdog organization, alerted the Federal Trade Commission of the mislabeled products and the FTC launched a probe. However, Walmart dropped the label from the offending goods and since doing so, the FTC shut down the probe.
Is the Retail Giant Actually Struggling?
On the profit side, Walmart has had better days. The company recently laid off 450 of 1,800 workers stationed at its Arkansas headquarters. The company has felt the burn of growth from online companies such as Amazon.com. Walmart executives have made determined statements on how the company plans to significantly invest in growing its online presence. Also, the company has pledged $1 billion towards raising employee wages and providing additional training opportunities. This comes after the company has come under repeated scrutiny for its price-lowering tactics, which include shipping low-cost manufacturing jobs overseas and low wages for U.S. workers. But any changes to the business model will not come without costs and the company’s profits may continue to take a hit in an effort to appease customers, the changing market and employees.
Walmart has long been known for its low prices, but is this a trademark the company can carry over in the years to come? Can the retail giant balance the need for increased financial attention to good business practices and employee satisfaction with the need for rock-bottom prices to keep customers coming back and profits going up?