US retail major Walmart to help Flipkart said that it has set up a function called partnership services where it can help Flipkart Group by leveraging its global scale and best practices at the annual investor day in Bentonville on Tuesday. Walmart International CEO Judith McKenna also said that the company remains committed to a Flipkart IPO while it has not set a timeline for it.
“Take it as a measure of our confidence that we believe that this is the right path for Flipkart. It is important for retaining the right talent and while we are not putting a timeline on it, we are supportive of it as is the Flipkart board,” she said. Walmart also reiterated the impact on its earnings of the Flipkart acquisition, with losses of 25-30 cents per share in FY19 which translates to $737.7-885.23 million. For the full financial year FY20, Walmart has projected that it will lose 55-60 cents per share because of the Flipkart deal which translates to $1.66-1.77 billion. While Walmart shares fell in pre-market trading, they were up by 1.87% when market opened on Tuesday.
The company reiterated that the change in earning guidance, which was notified when the Flipkart transaction was announced, is driven only beccause of the Flipkart deal and is effective now since the transaction closed in August. In May, Walmart had agreed to buy 77% stake in Flipkart for $16 billion, valuing the company at $22 billion in its biggest acquisition globally. Walmart also has a right to invest another $3 billion in the company at the same valuation within a year of completing the deal.
McKenna stated that Walmart “expected to see strong competition” in India but the company is excited about the possibilities. Walmart said that Flipkart had 64 million annual active customers and the main platform accounted for 80% of the revenues. McKenna also said that Walmart was excited about the consumer-facing payments platform PhonePe, which is owned by Flipkart. “We have seen in other markets how powerful payments and financial services can be and that is why are excited about this particular part of the system,” she said, adding that PhonePe has 100 million monthly transactions and reached transaction processing value of $32 billion in September.
ET had recently reported that four senior leaders from Walmart have been appointed at the Flipkart group level, with its M&A head Emily McNeal joining as senior vice president and group chief financial officer. The two companies are also expected to work closely on Flipkart’s omni-channel strategy and expanding the still nascent grocery business, though McKenna did not elaborate on it.
The development was reported by retail.economictimes.indiatimes.com