Chennai: Walmart Inc made its biggest buyout recently with the complete acquisition of Flipkart but has stated that it expects the latter firm to report a loss of at least Rs 5,300 crore in the current financial year.
The American retail giant stood firm in its view that the buyout was a step in the right direction.
The world’s largest retailer revised its earnings per share estimate for the financial year ending to $4.65-4.80 from $4.90-5.05, according to its statement released ahead of the investor summit. The company said the revision is due to a 25-cents per share dilution from Flipkart’s acquisition.
Walmart in May bought a 77 per cent stake for $16 billion in homegrown e-commerce company to take on Amazon and Alibaba-backed Paytm in a three-way battle in India.
Walmart had 2.9 billion outstanding common shares as of 28 March. Given the EPS dilution of 25 cents, it expects Flipkart to suffer a loss of about Rs 5,300 crore in the ongoing financial year, according to BloombergQuint’s calculations.
Accumulated loss of Flipkart stood at nearly Rs 24,000 crore ($3.6 billion) as of March 2017, according to its filings in Singapore.
The Indian e-commerce market, about two per cent of retail sales today, is growing four times the rate of total retail, Judith McKenna, president and chief executive officer of Walmart International, said, “China was two percent in 2009 but today it is about 25 percent. We have no doubt that e-commerce in India is the right place to be.”
Walmart expects international sales to grow nearly five percent by 2020, driven by Flipkart. India’s largest online retailer reported net sales worth $4.6 billion in the financial year ended March.
Walmart, however, said it expects to face a strong competition in the Indian market but is “prepared for it”. It also remains committed to an initial public offering of Flipkart.