Walmart Gears Up For Earnings Shortly After $16 Billion Flipkart Acquisition

AP Photo/Gene J. Puskar

Walmart reports Q1 fiscal 2019 earnings before market open on Thursday, May 17, and the company just made its largest acquisition ever ahead of its report.

Walmart announced last week it was buying a 77% controlling stake in Flipkart, India’s largest online retailer, for $16 billion. The remaining stake will be controlled by co-founder Binny Bansal and other investors including Tencent, Alphabet and Microsoft.

Flipkart’s net sales grew 50% year over year to $4.6 billion in its most recent fiscal year that ended in March, according to Walmart’s press release on the deal. To put that in perspective, Walmart reported that its e-commerce sales grew 44% in fiscal 2018, totaling $11.5 billion.

The market didn’t seem to have a positive initial reaction to the deal as Walmart opened down almost 4% on May 9, the day of the announcement, which noted there would be a negative impact on EPS this year of approximately $0.25 to $0.30 and about $0.60 in fiscal 2020 as a result of operating losses and interest expense.

This isn’t the first deal Walmart has made to expand into international markets. In addition to India, management has said it considers China one of its other key growth markets and Walmart has increasingly partnered with JD.com, one of China’s largest online retailers, since the two announced a strategic alliance in 2016. Walmart upped its stake in JD.com from 5.9% to 12.1% in early 2017.

As the company has expanded in some overseas markets, it has exited others. In Q4, Walmart exited its e-commerce business in Brazil, and has been steadily shuttering stores in the country.

Excluding the impact of foreign exchange, net sales from Walmart International were up 2.8% year over year to $31.9 billion in Q4, while operating income declined 16.9% to $1.3 billion.

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Read Again https://www.forbes.com/sites/jjkinahan/2018/05/15/walmart-gears-up-for-earnings-shortly-after-16-billion-flipkart-acquisition/

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