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Wal-Mart’s CFO said he spends a significant portion of his workday trying to build a better financial organization within the company.
“It’s all about improving the financial organization. That’s my highest priority by far,” said Tom Schoewe, executive vice president and CFO of Wal-Mart Stores, Inc., in a chat with Stacey Kole, deputy dean for the Full-Time MBA Program, at the Hyde Park Center May 23.
The company has three major businesses—Wal-Mart U.S., Sam’s, and Wal-Mart International—and “when you looked across the finance functions, those operating finance organizations required improvement,” Schoewe said. He said International was probably the strongest of the three.
But the financial organizations are changing dramatically. “We are muscle-building those organizations both from inside the company and from outside the company, so that 12 to 18 months from now, you won’t recognize those operating finance organizations.”
Wal-Mart also has been looking to improve its return on invested capital to appeal to portfolio managers who buy stock. Schoewe has been traveling both coasts to canvass portfolio managers, he said. “With that in mind, we have driven every aspect of our decision-making around return on invested capital,” Schoewe said.
Wal-Mart’s effort to buy an industrial loan corporation would reduce costs because instead of paying a major bank the sponsorship fees when customers use credit cards and debit cards, Wal-Mart would effectively pay itself. He reminded the group that Wal-Mart’s “everyday low cost” model allowed it to provide its customers “everyday low prices.”
This plan has evoked the unwarranted fear that Wal-Mart is going to get into banking and drive out smaller businesses, Schoewe said.
“We don’t want to get into branching.” If Wal-Mart did, Schoewe said, why would it be making long-term commitments with banks to get them to come into its super centers? “It’s all about the fear of W.”
—Mary Sue Penn