Date: 19th May 2019
The earnings of the US giant has dropped significantly by 41.7 percent after it acquired Flipkart in India. In an attempt to increase its customer base around the globe, the supermarket chain took over Flipkart, which has been put up as the reason for the reduced gross profit for the first quarter of this year.
Brett Biggs, Walmart’s CFO, announced the earnings for quarter February-April and said that the dip in the profit figures had been anticipated. In his statement, he added that the revenue of the company rose to $123.93 billion. However, sales around the globe reduced by 4.9 percent.
Regardless of the declining gross profit margins in many markets around the world, the management of Walmart is optimistic about the future. The acquisition of Flipkart by the company has had its effect on its debt, expenses and interest payment figures.
The decision to acquire Flipkart came as the company wanted to challenge the e-commerce giant in India, Amazon. According to reports, Flipkart and Amazon held about 80 percent of the market share in the subcontinent.
The company’s CEO, Doug McMillon, expressed his optimism for the acquired company and its payment platform PhonePe. As sources reveal, the CEO had visited India in order to interact with Flipkart’s management to form an appropriate strategy for tackling Amazon.
The shareholders received $3.7 billion from the company through dividends and buyback of shares. The trend of share repurchases by the company shows that the rate of repurchases has risen in recent years.
While the company did show improvements in the US market in terms of operating income, it was overshadowed by its declining performance in the international markets.