Walmart-backed Indian e-commerce
marketplace Flipkart helped the US retail giant partially offset the revenue losses of around $1.3 billion arising due to the sale of a majority stake in its Brazilian subsidiary.
This happened despite Walmart
accounting sales from Flipkart for only 44 days in the quarter under review. Walmart’s overall revenues earned from international operations fell by 2.6 per cent to $28.79 billion in the third quarter. “The sale of a majority stake in Walmart
Brazil resulted in a $1.3 billion net sales headwind that was partially offset by sales from Flipkart for approximately half of the period,” said Walmart
in its presentation to investors on Thursday.
While Flipkart did provide a boost to Walmart’s international earnings, the Indian company was a drag on its profitability. The US firm reported a fall of 42 basis points in gross margins from its international business, primarily driven by Flipkart.
This was in line with Walmart’s expectations, as Flipkart continues to burn significant amounts of money to fend off competition from rival Amazon in India. In October, Walmart had lowered its earnings per share (EPS) guidance by 25 cents, largely on account of dilution following the $16 billion acquisition of Flipkart. However, on Thursday, Walmart revised its EPS upwards to $4.75 to $4.85 in anticipation of better sales during the holiday period in its home market of the US, partially offsetting the reduction caused by Flipkart.
follows a setback for Walmart in India, when Binny Bansal, co-founder and Group CEO of Flipkart, stepped down from the position following allegations of “serious personal misconduct” against him. While an investigation found no proof in the complainant's claims, it did, however, detect lapses in Bansal's judgement and a lack of transparency.
Bansal will, however, continue to be on Flipkart's board and will stay invested in the firm, he said in a letter to employees announcing his resignation. He currently holds around 4.2 per cent stake in the Indian e-tailer, while Walmart has increased its shareholding to 81.3 per cent as of August 2018, when the deal was closed.
Walmart's overall revenues increased by 2.4 per cent to $126.1 billion in the quarter ended October 31, while consolidated net income stood at $1.71 billion versus $1.75 billion a year ago. The company's share price fell 1.29 per cent to $100.21 per share at the time of going to press.