Strong show in India, US increase Walmart's international sales by 2.8%

Topics Walmart | Walmart India | Flipkart

Walmart, the world’s largest retailer, said on Tuesday its international net sales for fiscal 2020, increased 2.8 per cent in constant currency with strength in India, Mexico, and China. For fiscal 2020, revenue was $524.0 billion, an increase of $9.6 billion, or 1.9 per cent. Excluding currency, revenue was $528.1 billion, an increase of $13.7 billion, or 2.7 per cent.

“In Q4 (fourth quarter), we saw strong performance in the US with e-commerce and Sam’s Club plus strength in Mexico, India and China,” said Doug McMillon, president and chief executive officer, Walmart, in a statement.

In the fourth quarter, Walmart International, the segment that consists of the retail giant’s operations outside the US, e-commerce, led by Flipkart and online grocery sales in several markets, contributed 12 per cent of segment sales. In Q4, revenue was $141.7 billion, an increase of $2.9 billion, or 2.1 per cent.

“With respect to India, we remain excited about the opportunity we have there. The way Flipkart and PhonePe (digital payments firm) are scaling up is impressive,” said McMillon during the 2020 Investment Community Meeting on Wednesday. 

Walmart is locked in a battle with Amazon for dominance in India’s online retail market through Flipkart. “The fourth quarter started and ended strong with solid sales growth through Cyber Monday and in January,” said Brett Biggs, chief financial officer, Walmart. “We experienced softness in some key international markets, as well as in Chile, where unrest led to disruption in the majority of our stores. Walmex (Walmart de Mexico), China, and Flipkart all had a solid quarter.”

The firm said it reported record sales at Flipkart’s “The Big Billion Days” sales event.

Walmart said the return on assets (RoA) was 6.7 per cent and 3.4 per cent for the financial years ended January 31, 2020 and 2019, respectively. The increase was due primarily to the increase in consolidated net income chiefly due to the change in the fair value of the investment in Chinese e-commerce firm and lapping up the $4.5 billion net loss in FY19 related to the sale of the majority stake in Walmart Brazil. 

This was offset partially by the dilution to operating income related to Flipkart as well as business restructuring charges recorded in fiscal 2020. The return on investment (RoI) was 13.4 per cent and 14.2 per cent for the fiscal years ended January 31, 2020, and 2019, respectively. 

The decrease was due to the reduction in operating income primarily as a result of the dilution from Flipkart as well as business restructuring charges recorded in fiscal 2020. Walmart’s net cash also decreased due to the inclusion of a full year of Flipkart operations and other factors. It had net cash provided by operating activities of $25.3 billion for the fiscal year ended January 31, 2020, which decreased when compared to $27.8 billion for the fiscal year ended January 31, 2019.

Among other highlights for the fiscal year 2020, Walmart said it launched PhonePe as a payment option at Walmart’s “B2B Cash & Carry” stores in India. The company said it had created the “Walmart Vriddhi Supplier Development Program” to train 50,000 Indian small businesses for “Make in India” initiative.

For Q4, concern over Brexit (British exit) in the UK and unrest in Chile affected performance. There were positive comp (comparable store) sales in six of 10 markets, including the major markets of Mexico, China, and Canada. Walmart also provided guidance, which reflects the company’s expectations for fiscal year 2021. Assumptions in the guidance include that economic conditions, currency rates, and the tax and regulatory landscape remain generally consistent. The company said it continued to monitor the events in Chile and the coronavirus outbreak and had not included any potential financial effects in its assumptions.

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