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As it grapples with sluggish store sales, Wal-Mart said Thursday that its U.S. CEO is stepping down and is being replaced by the head of the company's Asia operations.

Wal-Mart's stock ended down 0.8%, closing at $76.35.

Bill Simon, who has been in the role since June 2010, was a top candidate to become CEO of the whole company, but lost out to Doug McMillon.

Simon will be replaced by Gregory Foran and start a six-month consulting contract soon.

In a Wal-Mart release Thursday, Simon said it "felt like the right time to move on and focus on my next opportunity."

Wal-Mart spokesman David Tovar said it was Wal-Mart and Simon's decision, noting he "is leaving on good terms."

'When someone else gets (the job) out of two candidates, it's not unexpected when the other person leaves to go do something else," said Tovar.

But the move comes just weeks after Simon made fairly dire comments about consumers and the economy in a July 8 interview on CNBC.

Retail analyst Brian Sozzi said that while the change might have been brewing since McMillon took on the CEO role in February, he believes the "last straw" was when Simon made what sounded like an earnings warning in the CNBC interview. Referring to unemployment numbers, Simon said it was "going to take a while for those numbers to balance out" and singled out low- and middle-income consumers as being "still pretty challenged."

When he asked Wal-Mart about the comments, Sozzi says he was told they should be taken at "face value" and did not constitute a warning.

"When you're at Wal-Mart, you're not out there giving any interviews, especially ahead of back-to-school and holiday ... (unless) you have something positive to say," says Sozzi.

Whatever the reason for his departure, Nomura equity analyst Robert Drbul says Simon deserves credit for leading a turnaround at the company that re-emphasized low prices and product assortment. He also created more career opportunities for workers and launched a new plan to increase U.S. manufacturing.

"We believe Simon has made significant contributions to the company's success over the past seven years," Drbul wrote in a research note Thursday.

Foran will take over on Aug. 9 and report directly to McMillon. Simon will be available on a consulting basis "to ensure a seamless transition," the company said.

McMillon was named global CEO last November and started in the job in February, making the change at the top of U.S. operations his first major appointment.

Sales in the USA have been lackluster for Wal-Mart, which reported its smallest growth in quarterly sales in nearly five years in May.

"Greg is one of the most talented retailers I've ever met," McMillon said in a news release. "His depth of knowledge and global experience will bring a fresh perspective to our business."

Foran's accomplishments in China include progress in Wal-Mart's product mix, pricing, store operations and compliance, says Drbul, who credits Foran with spearheading strategic supply chain investments and improving the store
portfolio

As part of a retirement agreement reached last Friday, a Securities and Exchange filing from today shows Foran will earn a salary of $950,000. Simon will get $4.5 million as part of a retirement package, the filing shows.

McMillon had "a number of conversations" with Simon about "the right time to leave," said Tovar. Simon wanted to stay through a transition period, which will give him time to "figure out his next challenge," says Tovar.

McMillon didn't spare enthusiasm for his new promotion. He cited Foran's "passion for fresh food, experience in general merchandise and commitment to e-commerce," which he said will help the retailer better serve customers.

The company, like most retailers, blamed severe winter weather in the Northeast, which kept shoppers out of its stores. The company was hit harder than perhaps any retailer by the federal slash in Supplemental Nutrition Assistance Program benefits — also known as food stamps. At least 20% of Wal-Mart's customers are on food stamps.

Foran is a 35-year retail veteran. He joined the company in October 2011 and became president and CEO of Wal-Mart China in March 2012.

Before Wal-Mart, Foran had several jobs with Woolworths, which is the leading retailer in Australia and New Zealand.

As for whether it was Simon's decision to leave, Sozzi was skeptical.

"These are like pope jobs. It's an almost forever culture," says Sozzi. "It's a cushy job, and it's hard for these guys to give it up."

Contributing: Hadley Malcolm

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