Walmart International financials still negatively affected due to its acquisition of Flipkart

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In May 2018, Walmart bought majority stakes in Indian e-Commerce venture Flipkart and even in the current fiscal year Walmart International is facing its affects. Yesterday Walmart International reported $600 million operating income, though it is a huge number, but when compared last year’s same quarter, it was a drop of almost 50%. Last year Walmart’s operating income was $1.2 billion.

The company announced ‘As expected, the inclusion of Flipkart negatively affected operating income’.  Though the net sales increased by around 1.3% at $29.2 billion.

According to the company, addition of Flipkart and their strength in Walmex and China operations were somewhat offset the softness in the UK.

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Walmart made the biggest e-Commerce deal that world has ever seen in the year 2018 after it acquired Flipkart for a gigantic of an amount of $16 billion. Nonetheless, the company were content with the amount of sales Flipkart did in India during the festival sales ‘The Big Billion Days’.

Doug McMillion, President and CEO Walmart said, ‘We celebrated the first anniversary of Flipkart and PhonePe as part of the Walmart family. It was great to see record sales in India during The Big Billion Days event’. Adding ‘looking ahead, we’re prepared for a good holiday season. Our integrated offering with stores and e-Commerce delivers value and convenience for our customers’.

The US e-Commerce industry reported an increase of 2.5% i.e. $3.1 billion, resulting in $128 billion in revenues in the same quarter. The company reported net cash from operational activities of $ 14.5 billion this quarter, a decline of $2.8 billion when compared to same quarter in 2018 when the net cash were $ 17.3 billion. The reduction in net cash came in as a result of US associate payroll, operational expenses, and addition of Flipkart’s operations in Walmart.

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Walmart said ‘We generated free cash flow of $6.8 billion for the nine months ended October 31, 2019, which decreased when compared to $10.3 billion for the nine months ended October 31, 2018 due to the same reasons as the decline in net cash provided by operating activities, as well as $0.8 billion in increased capital expenditures’.

According to Paper.vc Flipkart’s revenue for the year 2018-19 were $6.14 billion. They said ‘The financials reveal how the e-tailer has performed after Walmart acquired 77 per cent of its equity in August 2018 for $16 billion ( ₹1,07,662 crore)’.

According to the financial posted, Flipkart successfully reduced their losses by 63 percent, to $2.42 billion from $6.6 billion.

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