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Walmart says USD 16 billion Flipkart deal to hit earnings

Walmart expects net sales growth to be about 5 per cent internationally in constant currency.

New Delhi: World's largest retailer Walmart on Tuesday said its USD 16-billion investment in Indian e-tailing giant Flipkart will hit its operating income as well as earnings per share.

The Bentonville, US-based company said its earnings per share (EPS) is now expected to be around USD 2.65-2.80 as compared to a previous guidance of USD 2.90-3.05 for the fiscal year ending January 31, 2019.

"FY20 operating income is expected to decline by a low single digit percentage range, but is expected to increase by a low single digit percentage range when excluding Flipkart in both FY19 and FY20," Walmart said in a regulatory filing.

Walmart, in May, had picked up 77 percent stake in Flipkart for USD 16 billion as part of its efforts to ramp up its e-commerce business as it takes head-on global rival Amazon.

The deal with Flipkart, which was completed in August this year, will not only help Walmart strengthen its play in the Indian market but also cash in on the burgeoning e-tailing market in India that is poised to touch USD 200 billion in the next few years.

The retail giant's investment in Flipkart also includes USD 2 billion of new equity funding to help accelerate the Bengaluru-based company's business that is locked in intense competition against Amazon's India unit. For FY2020, Walmart said it expects its US same-store sales growth to be in the range of 2.5-3 per cent.

Its net sales growth is forecast to be at least 3 per cent in constant currency, "negatively impacted" by deconsolidation of its Brazil business and lower tobacco sales at Sam's Club. Besides, Walmart expects net sales growth to be about 5 per cent internationally in constant currency.

( Source : PTI )
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