New York — Walmart CEO Doug McMillon, known for transforming the retail giant into a leading tech-focused company over his nearly decade-long tenure, is set to retire early next year, the company announced unexpectedly on Friday. McMillon’s retirement will take effect on February 1, with John Furner, who currently leads Walmart’s U.S. operations, stepping into the role.

Walmart’s stock reacted to the leadership news with an initial 3% drop in premarket trading, though it managed to recover slightly by midday. McMillon will stay on for an additional year to advise Furner during the transition, ensuring continuity for the company amid current economic challenges.

Under McMillon’s leadership, Walmart solidified its position as a significant player in the U.S. economy, serving as an indicator of consumer spending trends. The company claims that about 90% of U.S. households shop with Walmart, contributing to its staggering weekly customer base of more than 150 million.

The Bentonville, Arkansas-based company is also the largest private employer in the nation, with 1.6 million employees across its stores and corporate offices. Globally, that number rises to 2.1 million.

Furner, who began his Walmart career as an hourly associate in 1993, has a track record of driving growth within Walmart’s U.S. division and has lived and worked abroad. Analysts have noted his extensive experience and anticipate he will continue McMillon’s overarching strategies. However, the transition comes at a critical time when retailers are grappling with economic uncertainties, tariffs, and labor shortages exacerbated by recent policies.

During McMillon’s 10 years as CEO, he committed to improving the company’s workforce conditions by increasing wages, enhancing parental leave, and promoting educational opportunities for employees. His focus on employee investment was accompanied by aggressive efforts to integrate cutting-edge technology, including artificial intelligence and automation in supply chain processes.

Greg Penner, Walmart’s chairman, remarked on McMillon’s legacy, praising his vision and commitment to making Walmart more innovative and aligned with its mission of providing value to customers. Penner noted that McMillon leaves the company stronger than when he took the helm.

Walmart’s revenue surged over 40% during McMillon’s leadership, climbing from $485.7 billion in his first fiscal year to approximately $681 billion in the latest fiscal year. The value of Walmart’s stock also significantly increased, more than quadrupling since he became CEO.

Though McMillon faced challenges, including an initial backlash from investors after lowering sales forecasts in 2015, he successfully rebuilt trust, resulting in higher sales and improved employee retention. His tenure also marked the company’s decision to halt the sale of ammunition for handguns and short-barrel rifles, showcasing a shift towards corporate responsibility amid societal pressures surrounding gun violence.

As Walmart navigated the complexities of the COVID-19 pandemic, it leveraged its logistical strengths to keep prices low and meet increased consumer demand, demonstrating resilience during a tumultuous time for the retail sector.

As McMillon prepares to step down, the focus will shift to Furner’s ability to maintain the momentum of the company’s transformative strategies while tackling the retail environment’s evolving challenges.