International e-comm growth hit by Flipkart’s ‘limited ops’ during Feb-April: Walmart

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Published: May 20, 2020 4:45:09 AM

According to a report released by Forrester Research in March, e-tailers are expected to take a hit of at least $1 billion in gross sales due to the lockdown that limited shipments to essential items.

Walmart said it incurred incremental costs amounting to nearly $900 million related to Covid.Walmart said it incurred incremental costs amounting to nearly $900 million related to Covid.

Walmart on Tuesday said that Flipkart’s “limited operations” for a considerable period of the February-April quarter negatively affected growth of the firm’s international e-commerce segment.

The US-based retailer’s international net sales increased by 3.4% to $29.8 billion during Q1FY21. E-commerce contributed 9% of the total segment net sales led by growth in China, Canada, the UK and Mexico, the company said in a statement. International operating income grew by 9.2% to $806 million. Walmart’s calendar runs from February to January.

India, which imposed a countrywide lockdown starting March 25 to curb the spread of Covid-19, barred e-commerce firms from delivering non-essentials products, a major sales driver for the companies. Online firms were restricted to delivering only essentials and were allowed to resume shipments of non-essentials partially (in green and orange zones) only in early May. In the fourth phase of the lockdown, set to end on May 31, the government however permitted the companies to resume delivery of non-essentials in the red zones, except the containment areas. Major markets like Mumbai, New Delhi, Chennai and a handful large cities fall under red zones.

Smartphones and electronic items typically form the bulk of orders serviced by e-commerce companies.

According to a report released by Forrester Research in March, e-tailers are expected to take a hit of at least $1 billion in gross sales due to the lockdown that limited shipments to essential items. The report had then captured the impact of the initial 21-day lockdown period.

Due to unprecedented variability in the macro environment brought on by Covid-19, Walmart said it is withdrawing financial guidance for fiscal year 2021 due to the unprecedented variability in the macro environment brought on by Covid-19.

“The decision to withdraw guidance reflects significant uncertainty around several key external variables and their potential impact on our business and the global economy, including: the duration and intensity of the COVID-19 health crisis globally, the length and impact of stay-at-home orders, the scale and duration of economic stimulus, employment trends and consumer confidence,” said chief financial officer Brett Biggs.

Biggs said that while the short-term environment will be challenging, the company is well positioned for long-term success in an increasingly “omni world.” “Our business fundamentals are strong and our financial position is excellent,” Biggs added.

Walmart said it incurred incremental costs amounting to nearly $900 million related to Covid.

Announcing the Q12020 results last month, Amazon had said its India business had been the worst hit among its international operations due to the constraints of operating during the lockdown period.

Walmart’s total revenue during Q1 FY21 increased by 8.6% to $134.6 billion. “Unprecedented demand for products across multiple categories led to strong top-line results,” the company said. Consolidated operating income grew by 5.6% to $5.2 billion.

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