Walmart: Lockdown impact on Flipkart ‘negatively’ affects international sales by nearly 7% in Q2 FY21
Even as Walmart posted a 5.6 per cent increase in its revenue for the quarter ending July 31 FY21 to $137.7 billion from $130.4 billion for the year-ago period, its international business saw a decline of 6.8 per cent partly due to India’s Covid lockdown. Walmart International, which is present in nine markets including China, Japan, Mexico, the UK, Canada, India etc., reported net sales of $27.2 billion for May-July quarter down from $29.1 billion for May-July quarter of FY20. “Net sales included the effects of the government-mandated closure of the company’s Flipkart business in India for a portion of the quarter, as well as similar actions in markets in Africa and Central America,” Walmart said in its earnings release on Tuesday. Walmart’s fiscal year is February-January.
Flipkart had resumed partial operations post 40-day lockdown (which began on March 25) starting with green and orange zones on May 4 followed by red zones as well on May 18 as per the Ministry of Home Affairs guidelines. Flipkart along with other delivery businesses in food, pharmacy, and other sectors had reported supply chain and delivery challenges even as their delivery personnel strength fell significantly amid restricted operations during the lockdown.
However, Walmart noted that it was due to the changes in currency rates that had negatively affected net sales by approximately $2.4 billion. Otherwise, “excluding currency, net sales would have been $29.6 billion, an increase of 1.6 per cent.” E-commerce, nonetheless, contributed 12 per cent of Walmart International’s total sales led by “omnichannel capabilities”.
Walmart added that since the relaxation in lockdown guidelines, the gross merchandise value (GMV) at Flipkart has exceeded pre-Covid-19 levels. According to the data from a RedSeer analysis in July, the e-commerce sector had recovered beyond pre-Covid level in June itself. The monthly GMV of the online retail market, which stood at around $30 billion during January 2020 declined to $3.5 billion in April but bounced back beyond the pre-Covid level to $36.5 billion – around 20 per cent jump. This also that while the sector took around three years to penetrate from 1.5 per cent in 2016 as part of the overall retail to another 1.5 per cent by 2019, it added another 1.5 per cent in just six months this year to around 4.5 per cent.
Meanwhile, Walmart also said that the company had incurred ‘incremental costs’ of $1.5 billion related to Covid during the quarter. “I want to give a big thank you to our associates for their tireless efforts during these unprecedented times,” said Doug McMillon, President and CEO, Walmart in the company statement. Flipkart had last month acquired Walmart India’s wholesale business and launched the B2B marketplace — Flipkart Wholesale — amid increasing competition in the online grocery war with Amazon, BigBasket, Grofers and the latest entrant JioMart to capture millions of small kirana stores and small businesses. Walmart owned and operated 8 Best Price cash and carry wholesale stores that offered close to 5,000 items. It also had two fulfillment centres based in Lucknow and Hyderabad.