Walmart Says Flipkart’s Gross Sales Exceed Pre-Covid Level

Walmart Inc. said the gross sales of Flipkart after resuming operations in mid-May when the government eased the lockdown curbs have exceeded pre-Covid-19 level.

Flipkart’s performance demonstrated the resilience of the business with growth in a challenging period, Doug McMillon, chief executive officer at Walmart, the world’s biggest big-box retailer, told investors while declaring May-July results. It was nice to see as the government restrictions start to get lifted, how the volume came back, he said.

“We’re really pleased with how this whole thing has gone since we made the investment and the teams managed the Covid-19 environment in a really effective way,” he added.

This is not surprising, according to Satish Meena, forecast analyst at Forrester Research. “With people staying at home, online commerce has taken off in a big way in the country and was bound to cross the pre-Covid numbers, he said over the phone. “There were a few supply issues but they are a passe for the firms now.”

Walmart, benefiting from soaring online orders, saw its U.S. e-commerce sales rise 97% in the quarter ended June, the fastest growth in online sales.

Yet, its net sales growth for the international business was negatively affected because of the lockdown in India for about half a quarter forced Flipkart to shut operations.

International business declined 6.8% to $27.2 billion, the company said, partly because of changes in currency rates and operational limitation in several markets such as Africa and Central America. Excluding the forex impact, net sales rose 1.6% to $29.6 billion, it said. For Walmart International e-commerce contributed 12% of total net sales.

Walmart, which acquired a majority stake in Flipkart for $16 billion in 2018, led a $1.2-billion investment, valuing the e-commerce firm at $24.9 billion. Asked why investment was done at a lower valuation, McMillon said that they are not getting hung up on valuations in the short term.

“Over time, I think everybody will understand just how valuable that business in India is whether the Flipkart portion or PhonePe portion,” he said, adding that with the investment they wanted to make sure that Flipkart has got enough room and enough cash to operate. Last month, Flipkart also acquired the wholesale business of Walmart India as it looked to strengthen its wholesale business.

“This is a time when there's so much of an opportunity that the size of India is significant, we want to make sure that we are on our front foot, being aggressive,” he said.