Walmart Takes $290 Million Hit Due To Flipkart-Owned Jabong

Walmart International, which consists the retail giant’s operations outside the U.S., took a non-cash impairment of about $290 million in the third quarter on account of the trade name of Flipkart-owned fashion portal Jabong, the company said in its earnings.

This comes after Walmart Inc.-owned Flipkart decided to consolidate the back office functions of Jabong with Myntra.

Walmart International’s operating income fell 46.2 percent on a reported basis and 40.8 percent in constant-currency terms in the third quarter primarily due to Flipkart, according to the retail behemoth’s quarterly filing.

Excluding the impact of a non-cash trade name impairment charge, Walmart said that the operating income would have declined 21.4 percent and 16.2 percent on a reported and constant-currency basis, respectively. “As expected, the inclusion of Flipkart negatively affected operating income,” Walmart said in the statement.

Flipkart’s rising losses were among the biggest concerns at the time of $16-billion takeover by Walmart. It’s locked in a battle for supremacy in India’s online retail market with Jeff Bezos-led Amazon.com Inc., which is nearly done investing $5 billion in one of the world’s fastest-growing e-commerce markets.

Yet, Walmart Chief Executive Officer Doug McMillon said he is excited about what’s happening at Flipkart and PhonePe, its payment arm. “Beyond just our current results, the Indian market represents a significant opportunity for growth.”

For the flagship Big Billion Festive Sale in India, Flipkart saw a 75 percent growth in new customers compared with last year, McMillon said, adding that the company is making good strides in driving growth from Tier-II cities. PhonePe is acquiring more than three million new customers per month, he said.

Walmart’s net income jumped more than 92 percent to nearly $3.3 billion in the three months ended October compared to the same quarter a year earlier. Its total revenue rose 2.5 percent, an increase of $3.1 billion, and touched $128 billion in the quarter.