Walmart says Flipkart’s limited operations negatively impacted international business

FILE PHOTO: The logo of Flipkart is seen on the company's office in Bengaluru, India, May 9, 2018. REUTERS/Abhishek N. Chinnappa/File photo

American retail giant Walmart Inc. said Tuesday that net sales for its international business was impacted as its Indian subsidiary Flipkart was unable to make non-essential deliveries during the virus lockdown.

“As a result of the crisis and towards the end of the quarter, we had pretty extensive stores and operational closures in markets like South Africa, India … and our Flipkart operations were impacted by restrictions on non-essential deliveries,” said Brett Biggs, executive vice president and chief financial officer, Walmart said in their first quarter (February-April) earnings call.

Walmart follows the February to January period as its financial year.

Separately, in an investor presentation, Walmart said, “E-commerce (for Walmart International) contributed 9% of total segment net sales, led by growth in China, Canada, UK and Mexico. Limited operations of the company’s Flipkart business in India for a portion of the quarter negatively affected growth.”

Online retailers in India were permitted to sell only essentials during the nationwide lockdown that began on 25 March. The government has since eased the curbs, and in the fourth phase of the lockdown, these retailers have been allowed to operate and deliver non-essential goods in so-called red zones as well.

“… The closure of stores and warehouses in some of our markets contributed to volatility of sales for the quarter and we expect even more in Q2. For instance, the Flipkart business was limited by government regulations to selling only essential items for several weeks,” said Doug McMillon, Walmart’s president and CEO.

He said that April falls in Q2 for several of Walmart’s international markets and it was a challenging month due to how different markets and governments reacted with regulation to the covid-19 crisis.

Walmart expects volatility to continue in several international markets in its second quarter (May-July).

Curbs on selling non-essential items, particularly mobile phones, electronic gadgets and apparel, also hit margins and revenues of several e-commerce players, since it comprises the bulk of their business.

In the investor presentation, Walmart also said that gross profit rate for its international business has risen primary due to its Flipkart India business.

“Gross profit rate increased 10 basis points on a reported basis primarily due to the company’s Flipkart business. This was partially offset by an outsized change in mix towards lower margin categories and formats in response to covid-19,“ the company said.

The article was first published on livemint.com

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.