40-day full lockdown impact on Flipkart ‘negatively’ affects Walmart International’s growth in Q1 2020

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Updated: May 19, 2020 7:29 PM

Walmart's revenues grew 8.6 per cent from $123.9 billion in Q1 2019 to $134.6 billion in Q1 2020, exceeding Wall Street’s expectations of $132.80 billion.

us markets, wall street, us economic data, stockalWalmart’s net income increased to 3.99 billion dollars for Q1 2020 from 3.84 billion dollars for the same period last year. Image: Reuters

Suspension of Flipkart’s services during the lockdown, which began on March 25, has reflected in the growth of its parent company Walmart’s international business arm — Walmart International in the first quarter (Feb-April) of 2020. Announcing the quarterly results, Walmart said that Flipkart’s business during the first quarter had a negative impact on the international business. “Limited operations of the company’s Flipkart business in India for a portion of the quarter negatively affected growth,” Walmart said in its financial presentation on Tuesday.

Revenues for Walmart International, which is present in nine markets including China, Japan, Mexico, the UK apart from India, grew 3.4 per cent to $29.8 billion from Q1 2019 and had e-commerce share of only 9 per cent led by the growth in China, Canada, the UK, and Mexico. Flipkart resumed full operations in green and orange zones on May 4 after 40 days of lockdown and later expanded to cover red zones as well on May 18 following the Ministry of Home Affairs guidelines. The company along with other e-commerce and online delivery players had reported supply chain and delivery challenges even as delivery personnel strength declined significantly amid restricted operations under which orders only essential goods and services were fulfilled.

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The online retail sale was worth $33.5 billion in 2019 including movie tickets business that was likely to grow by 26 per cent this year to $42.21 billion. However, with the Covid impact, as per data from Forrester, the growth will be down to 5 per cent. This means that the sector would have to compromise with a marginal growth to just $35.1 billion this year. “After taking in account of the lockdowns and the long term impact on spending we expect the growth rate to slow in 2020 to around 5 per cent,” Satish Meena, Senior Forecast Analyst, Forrester had told Financial Express Online.

While Flipkart primarily helped Walmart International’s gross profit rate increase by 10 basis points but it was “partially offset by an outsized change in mix towards lower margin categories and formats in response to Covid-19.” Walmart’s net income increased to $3.99 billion for Q1 2020 from $3.84 billion for the same period last year. Its revenues grew 8.6 per cent to $134.6 billion from $123.9 billion, exceeding Wall Street’s expectations of $132.80 billion.

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