President and CEO of Walmart Doug McMillon takes part in a strategic and policy CEO discussion in Washington, U.S., April 11, 2017. REUTERS/Joshua Roberts

By Siddharth Cavale

(Reuters) -Walmart announced on Friday that CEO Doug McMillon will retire next year after more than a decade leading the world’s largest retailer, as the company navigates new challenges such as artificial intelligence and global tariffs.

McMillon, 59, will be replaced by U.S. division chief CEO John Furner, 51, a veteran with three decades at the company.

Walmart's shares fell 2.5% in early trading, in part due to concerns McMillon's decision to step down came sooner than anticipated.

McMillon, who joined Walmart in 1984 as an hourly associate has served in leadership roles at all three Walmart divisions: U.S., International and Sam's Club. He rose through the ranks to become CEO of Walmart in February 2014, replacing Mike Duke.

Walmart on Friday said McMillon will retire in January next year, but continue to be employed as an adviser of the company through January 31, 2027. The Bentonville, Arkansas-based retailer's stock has risen 323% since he took over, outperforming the S&P 500 index.

"Given that Mr. McMillon was unequivocally Walmart's best CEO since the company's founder in Sam Walton ... the announcement will likely cause some anxiety by shareholders, particularly since the change was a bit earlier-than-anticipated," said Chuck Grom, an analyst with Gordon Haskett.

The list of people who have held Walmart's top job since its 1962 founding is a short one; Furner will be only the sixth person to lead the company, with each of the previous CEOs lasting six years or more.

"Doug McMillon has been a terrific CEO, leading Walmart’s transformation into an even bigger and stronger retail powerhouse fueled by technology," said Joseph Feldman, an analyst with Telsey Advisory Group. "John Furner is the logical choice to be the next CEO. He is a lifer at Walmart who started as an hourly associate in 1993, so he is a good cultural fit," he added.

The move is the latest in a string of leadership changes sweeping through the retail sector as companies tackle tariff pressures, an uncertain economy and choppy consumer spending backdrop. Kohl's, Kroger and Target are among retailers who have named new CEOs this year.

Furner has been CEO of Walmart U.S since 2019. He joined Walmart as an hourly associate around three decades ago, and has held leadership roles across merchandising, operations and sourcing, the company said. He has also previously served as president and CEO of Sam's Club.

The company reports third quarter quarterly results next week.

(Reporting by Juveria Tabassum and Savyata Mishra in Bengaluru and Siddharth Cavale in New York; Editing by Savio D'Souza, Anil D'Silva and Nick Zieminski)