Walmart International declared a 65.3% plunge in operating income in its fiscal fourth quarter, mainly resulting from the disassociation of Indian entities Flipkart and PhonePe. In December, the Bengaluru-based e-commerce and fintech startup PhonePe announced that it was to become a standalone entity, while still being owned by Walmart, who would remain its largest shareholder. Both companies continue to operate under Walmart’s ownership.
In its earnings call for the three months ending January 31, the company declared that operating income had fallen from $800 million in the same period of the previous year to $300 million, due largely to “costs associated with separating Flipkart and PhonePe into separate entities.” Walmart’s stock prices dropped on the NYSE after forecasting a lower earning for the fiscal year and witnessing two years of diminishing profits; this highlights a challenging year ahead for the entire retail industry.
In October 2020, when PhonePe moved its headquarters to India and got separated from Flipkart (who had purchased it in 2016), Walmart Inc. and other PhonePe shareholders had to bear a hefty capital gains tax of nearly $1 billion. In 2018, Walmart Inc. gained majority ownership of PhonePe after acquiring Flipkart. PhonePe’s CEO and Co-founder, Sameer Nigam, revealed that the firm had to part with a whopping Rs 8,000 crore when shifting its domicile for tax purposes.
Walmart International’s net sales grew by 2.1% to reach $27.6 billion in the fourth quarter, however it was affected by Flipkart taking its major Big Billion Days sale forward to the previous quarter. Walmart has reported a 44 basis point drop in consolidated operating expenses as a percentage of net sales. The company reported strong profits due to its revenue growth and lower costs associated with the pandemic, which were partly offset by reorganization and restructuring expenses in its international sector.
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The US retail giant Walmart reported impressive revenue increase of 7.3% to $611.3 billion for the fourth quarter with both store and online sales performing well. However, consolidated operating income for the group declined by 5.5% to $5.6 billion over the same period.
The worldwide advertising industry had an outstanding year in 2023, having grown by 30% to reach $2.7 billion. Walmart Connect and Flipkart Ads spearheaded the surge in the United States and India respectively.
