Flipkart sales have crossed pre-Covid-19 levels, says Walmart CEO

McMillon said that he is pleased with how the teams at Flipkart managed the Covid-19 environment in a really effective way

Walmart, the world’s largest retailer, on Tuesday said the gross merchandise value (GMV) of the products sold on Flipkart, its majority-owned subsidiary in India, had surpassed that of the pre-Covid levels.

Doug McMillon, president and chief executive officer of the Bentonville-headquartered company, said this during a conference call to discuss the company’s second-quarter earnings (April-June).

Walmart held government orders in India prohibiting Flipkart’s business for a while in the second quarter responsible for lack of growth in its international operations. Similar actions in Africa and Central America also affected net sales.

In the second quarter, Walmart International’s net sales were $27.2 billion. Changes in currency rates affected them by approximately $2.4 billion. Excluding the currency factor, net sales were $29.6 billion, an increase of 1.6 per cent. There were positive comp sales (comparable-store sales, a key retail metric) in seven of every 10 markets.          

“Canada, China, and Mexico lead the way as customers (chose) one-stop shopping and omnichannel solutions,” said McMillon. He said this performance demonstrated the resilience of the business with growth in a challenging period.

In the second quarter, Walmart International’s operating income was $812 million, a decrease of 9.1 per cent. Its operating income in constant currency terms was $901 million, an increase of 0.9 per cent. Walmart International’s gross profit rate increased only 74 basis points. 

Also, for Walmart International, e-commerce contributed 12 per cent of net sales, led by omnichannel capabilities.

Walmart had invested $16 billion in 2018 to buy a majority stake in Flipkart. In July, it led a $1.2-billion round in Flipkart, valuing the e-commerce firm at $24.9 billion.  He said over time everybody would understand how valuable the businesses in India, Flipkart, and digital payments firm PhonePe, were.

In July, Flipkart strengthened its wholesale presence with the acquisition of Walmart India, which operates the Best Price cash-and-carry business.

Flipkart announced the launch of Flipkart Wholesale, a digital marketplace that looks to transform the kirana retail ecosystem by leveraging technology. “During these challenging times we continued to execute the strategy of building strong local businesses powered by Walmart and announced additional investment in China and India,” said Brett Biggs, executive vice-president and CFO, Walmart.

The company’s net sales and operating results were significantly affected by the global health crisis. However, increased demand for products in multiple categories led to a strong top line and gross margin results. Revenue was $137.7 billion, an increase of $7.4 billion, or 5.6 per cent. Excluding currency, revenue increased 7.5 per cent to reach $140.2 billion. Operating income was $6.1 billion. Walmart US comp sales increased 9.3 per cent, led by general merchandise and food. Walmart US e-commerce sales grew 97 per cent with strong results across all channels.