The timing of the shuffle is unusual, as Walmart typically makes senior-management moves at the start of its fiscal year in February. Walmart is gearing up for the holiday sales season amid global supply-chain bottlenecks that have forced it to charter its own cargo vessels, and it’s trying to add 150,000 new employees to its massive 1.5 million-person U.S. workforce despite a tight labor market.

(Bloomberg)—Walmart Inc., No. 2 in the 2021 Digital Commerce 360 Top 1000, has demoted the chief operating officer of its core U.S. business and installed a finance expert in the role, shuffling its senior leadership team just before the key holiday period.

Dacona Smith, one of the retailer’s highest-ranking Black executives, will shift to become executive vice president and chief operations officer of Walmart’s U.S. stores, unit CEO John Furner told employees. Chris Nicholas, previously finance chief of the U.S. unit, will take over the chief operating officer role, according to an Oct. 1 memo that was seen by Bloomberg News.

A company veteran of about 30 years, Smith was elevated to the U.S. chief operating officer spot just last year after serving in a range of store management roles. Along with the subtle change in Smith’s title, the shuffling adds an additional layer of management. Smith, who previously reported to Furner, will now report to Nicholas along with several other senior leaders.

“Our goal is to do a better job of connecting the dots and flow our inventory in new and more productive ways,” Furner said in the memo, which called Nicholas’s position new despite Smith previously holding the same role as executive vice president and U.S. operating chief. A company spokeswoman said Smith’s new position doesn’t constitute a demotion.

The timing of the shuffle is unusual, as Walmart typically makes senior-management moves at the start of its fiscal year in February. Walmart is gearing up for the holiday sales season amid global supply-chain bottlenecks that have forced it to charter its own cargo vessels, and it’s trying to add 150,000 new employees to its massive 1.5 million-person U.S. workforce despite a tight labor market. Over the past year, Walmart’s more than 4,700 U.S. stores have been criticized by R5 Capital analyst Scott Mushkin for failing to keep key items in stock.

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Walmart’s U.S. business generated $370 billion in sales last year, two-thirds of the company’s total revenue, and the unit also accounts for the lion’s share of the retailer’s profits. The U.S. operating-chief role had previously been held by Judith McKenna, who’s now CEO of the international unit and considered a possible candidate to run all of Walmart when CEO Doug McMillon eventually steps down.

Promotions slow

Black leaders make up 9.1% of Walmart’s officer ranks, according to its latest diversity report, an increase from 8.4% last year. But its promotion of Black workers into management has slowed recently, the report also said, and a recent internal survey of Black senior leaders showed that career advancement is difficult for them and they wouldn’t recommend working there. Walmart has said that the study was “early research” with an “unscientific and limited sample size.”

Smith has come in for criticism over his running of Walmart’s U.S. operations. Mushkin toured about 40 Walmart stores and wrote in a January note that the retailer was “an operational disaster area” with “rampant out-of-stocks” and “significant operational inconsistencies.”

“Store execution and standards were deeply problematic,” Mushkin said, and “what surprised us was how widespread the challenges were.”

Commenting at a Goldman Sachs conference last month, McMillon said, “As we said in our investor conference in February, we need more capacity through our supply chain. We need it with what’s flowing into stores and the role that stores will play in delivering for customers and for pickup.”

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Nicholas previously served stints in the finance departments of U.K. retailer Tesco Plc and Australia’s Coles Group Ltd. before joining Walmart as deputy finance chief of its international unit in 2018, according to his LinkedIn profile.

Steve Schmitt will take over as CFO of the U.S. business, Furner said in the memo, while Seth Dallaire joins the company from Instacart in the new postion of chief revenue officer.

Walmart shares were up 1.1% to $137.23 in New York trading at 2:39 p.m. The stock is down 4.8% this year, trailing behind the 16% gain of the S&P 500 index.

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