Is the Walmart New U.S. CEO Right for the Job?

Tickers in this article: WMT

NEW YORK (TheStreet) - Walmart's announcement Thursday that Bill Simon, CEO of Walmart U.S., is leaving the company and the world's largest retailer garnered mixed reactions by the analyst community.

Wall Street was generally unsurprised that Simon is leaving -- chatter that his departure may have been over disappointment at being passed up for promotion as Walmart's CEO earlier this year with the company instead choosing its international head, Doug McMillon. However, analysts seemed curious about Walmart's decision to pass over those underneath Simon to replace him, instead naming an executive who had been heading up its China and greater Asia operations.

Greg Foran, 53, Walmart's head of its operations in Asia, is replacing Simon, and his experience is "primarily outside the U.S.," Deutsche Bank analyst Paul Trussell wrote in a research note. "In our view, this presents a substantial learning curve and showcases a clear change in direction of the division, for him to successfully bypass all of Bill's lieutenants such as Chief Merchandising Officer, Duncan Mac Naughton."

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That said, the change in management "presents an opportunity for WMT to think differently about how it positions itself for the future of retailing," Trussell penned in the note. "These changes may include a substantial reduction in supercenter store openings and a focus on e-commerce and small stores, which we note would be a long-term positive for shares (but negative for dollar stores, grocery, and other discounters). Near-term, there is concern that 2Q results may once again be lackluster."

Walmart shares were falling 0.80% to $76.38 on Thursday.

Walmart is under pressure, as sales in its U.S. business have been struggling. The discount retailer said in May it expects U.S. comps for the second quarter to be "relatively flat." Under Simon, the unit has been making investments in its e-commerce business and placing focus on building smaller stores. Walmart reports fiscal second quarter earnings on Aug. 14. Analysts, according to Thomson Reuters, expect the company to report earnings of $1.21 a share on revenue of $119 billion, up just 2% year over year.

Foran will start his new position on August 9. Simon will be available as a consultant for six months to assist with the transition.

"Foran is not well known by Wall Street," wrote Faye Landes, an analyst with Cowen & Co., in a note to clients. "Foran joined the company recently - October 2011 - and has been working in Asia. He was appointed as head of Asia at the end of April 2014, implying that this most recent move was not in the works at that point. We will probably never know the backstory on this - it seems likely that the company knew or at least strongly suspected that Simon would leave, but maybe they originally had someone else in mind as head of U.S." In a press release earlier Thursday, Walmart cited Foran's experience citing him as a "35-year retail veteran."