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Wal-Mart taps insider to head international division

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[December 11, 2013]  By Phil Wahba and Siddharth Cavale

(Reuters)  Wal-Mart Stores Inc <WMT.N> on Tuesday said the head of its Canadian division would take over the retailer's international unit next year, succeeding Doug McMillon, who was named CEO of the company last month.

David Cheesewright, who also runs Wal-Mart's Europe, Middle East and Africa (EMEA) operations, takes the job at a time when Walmart International's profitability lags that of the overall company, and the unit is the focus of a costly bribery probe.

Cheesewright, 51, is credited with bringing the supercenter format to Canada and overseeing the integration of the Massmart acquisition in Africa and the Netto acquisition in Britain, where he started his Walmart career in 1999.

"We view Cheesewright as a natural choice for the job given the breadth and depth of his experience with Walmart International," Cowen & Co analyst Faye Landes wrote in a note, calling him a "one-man SWAT Team" for the unit.

Cheesewright will assume his new position on February 1, the same day McMillon takes the CEO post.

The British executive will continue to have a home in Toronto and will maintain a residence in Bentonville, Arkansas, where Wal-Mart is headquartered, a spokesman said.

Cheesewright is not the only Briton in the top ranks of the world's largest retailer. Earlier this year, it promoted Judith McKenna, the chief operating officer of its Asda unit, to the role of executive vice president of strategy and international development at Walmart International.

It is the second time in a month that Wal-Mart has promoted an insider to a top job. Two weeks ago the retailer announced McMillon would succeed Mike Duke as CEO.

Cheesewright faces a number of big challenges. For one, Walmart International's profitability has been hurt by its aggressive expansion. Last quarter it contributed 28.8 percent of overall sales but only 23 percent of operating income.

Wal-Mart is now scaling back its expansion in key markets. It is closing about 50 underperforming stores out of hundreds it has in the major emerging markets of Brazil and China, the company said in October.

Walmart International is the company's second-largest unit, after its U.S. operations, and had sales of $135.2 billion in 2012. It has over 800,000 associates in the international division, the spokesman said.

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On Cheesewright's watch, Wal-Mart undertook its biggest expansion in Canada in 2012 after almost 20 years in the market, with new supercenters aimed in part at keeping rival Target Corp <TGT.N> at bay. But last quarter Wal-Mart's Canadian comparable sales fell.

The integration of Wal-Mart's 2012 acquisition of South Africa's Massmart chain is proving to be challenging because of the difficult economy there.

Cheesewright also will have to manage the fallout from a U.S. Department of Justice probe into whether Wal-Mart paid bribes in Mexico to obtain permits to open new stores there, and whether executives covered up an internal inquiry into the payments.

The department is also looking into possible misconduct by the world's largest retailer in Brazil, China and India. Wal-Mart is also conducting an international probe. It has so far spent $300 million on the investigations and changes to its compliance programs.

The company is paying for lawyers to represent more than 30 of its executives involved in a foreign corruption investigation, according to people familiar with the matter, an unusually high number that shows the depth of the probe.

Cheesewright's successor as Canadian chief will be named at a later date, the company said.

Wal-Mart's shares were down 0.9 percent Tuesday afternoon.

(Reporting by Siddharth Cavale in Bangalore and Phil Wahba and Dhanya Skariachan in New York; editing by Kirti Pandey, Sriraj Kalluvila and John Wallace)

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