Walmart sees a $740 mn hit on quarterly profit on Flipkart acquisition

17 Oct 2018

American supermarket chain Walmart has warned investors that its acquisition of Indian online retailer Flipkart will make a big dent in its quarterly profit.

Earlier this year, Walmart agreed to pay $16 billion for a 77 per cent stake in India’s top online retailer, to gain access to a market it has been trying to enter for years.
The world's biggest retailer said the purchase will cut earnings by 25 cents a share, or about $740 million, in the current quarter. Walmart cut its profit target for the current year to a range of $2.65 to $2.80 per share from the earlier range of $2.90 to $3.05. 
Besides, the company said sales growth at its US stores could be a bit lower than the 3 per cent it estimated earlier this year. Walmart now expects sales to grow between 2.5 per cent and 3 per cent at stores open at least for a year.
Walmart also trimmed its full-year earnings forecast due to its purchase of a majority stake in Indian online retailer Flipkart and slow US sales growth.
Walmart projected that e-commerce growth next year would be about 35 per cent, slower than the 40 per cent expected this year. Chief executive Doug McMillon said the company's e-commerce and store plans were on track.
"While we're excited about what we've done so far, we aren't satisfied," he said. "As we execute today and build for tomorrow, our associates and unique omni-channel assets position us for success." 
Walmart shares fell 2.5 per cent to $91.50 in pre-market trading.