Walmart Expects Flipkart To Suffer Rs 5,300-Crore Loss This Year

Given an EPS dilution of 25 cents from Flipkart’s acquisition, Walmart expects it to suffer Rs 5,300-crore loss this fiscal.
The logo of Flipkart is seen on the side of a package at the company’s office in Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)
The logo of Flipkart is seen on the side of a package at the company’s office in Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)

Walmart Inc. expects Flipkart to report a loss of at least Rs 5,300 crore in the ongoing financial year even as the world’s largest big-box retailer reiterated that its biggest buyout was a step in the right direction.

The world’s largest retailer revised its earnings per share estimate for the financial year ending March 2019 to $4.65-4.80 from $4.90-5.05, according to its statement released ahead of the investor summit on Oct. 16. The company said the revision is due to a 25-cents per share dilution from Flipkart’s acquisition.

Walmart in May bought a 77 percent stake for $16 billion in homegrown e-commerce company to take on and Alibaba-backed Paytm in a three-way battle in India.

Walmart had 2.9 billion outstanding common shares as of March 28. 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.

To be sure, accumulated loss of Flipkart stood at nearly Rs 24,000 crore ($3.6 billion) as of March 2017, according to its filings in Singapore.

Yet, Walmart’s management remains bullish on the Flipkart acquisition .

The Indian e-commerce market, about 2 percent 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 2 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.”

Chief Financial Officer Brett Biggs agreed. “Winning in India is key for us,” he said.

Walmart expects international sales to grow nearly 5 percent by 2020, driven by Flipkart. India’s largest online retailer reported net sales worth $4.6 billion in the financial year ended March 2018.

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.

“We are in India for long term and we are here to be successful,” McKenna said.

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