Poor sales at Flipkart hits international business: Walmart

Bentonville, Arkansas headquartered Walmart said on Tuesday that the drop in sales at its Indian unit Flipkart eroded its international business for the quarter ended April 30, 2020. 

The company follows the February to January period as its financial year.

“Limited operations of the company’s Flipkart business in India for a portion of the quarter negatively affected growth,” the company said in a statement.

In April, the Indian government barred the delivery of non-essential goods by ecommerce companies, which was subsequently relaxed in green and orange areas. Last week, ecommerce delivery of non-essential items reportedly resumed in all zones, with the exception of containment areas.  

“As a result of the crisis, toward the end of the quarter, we had pretty extensive store and operational closures in markets like South Africa, India and in Central American countries. For example, 25% of stores in Africa were closed, and our Flipkart operations were impacted by restrictions on non-essential deliveries,” Brett Briggs, CFO of Walmart, said in a post-earnings investor call.

However, Flipkart business aided a 0.1% increase in its international business gross profit rate, which was partially offset by an increased demand for low-margin goods due to the Covid-19 pandemic.

At the company level, Walmart posted a 8.6% increase in total revenue to $134.6 billion from $123.9 billion a year ago, led by ecommerce sales in the US as consumers resorted to stockpiling and lowered the frequency of visiting physical stores. US ecommerce sales grew 74% this year, with strong results for grocery pickup and delivery services and marketplace. Its international operations grew 3.4% to $29.8 billion year-on-year and Sam’s Club, its wholesale unit, showed an increase of 9.6% to $15.1 billion.

Walmart also withdrew financial guidance for FY21, citing uncertainty created in the macro environment due to the pandemic as the reason. 

“Our business fundamentals are strong, and our financial position is excellent. Customers trust us to deliver on our brand promise, and I’m confident in our ability to perform well in most any environment. While the short-term environment will be challenging, we’re positioned well for long-term success in an increasingly omni world,” Biggs said in a statement released by the company.