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Walmart takes $290 mn non-cash impairment for Jabong

15
Nov '19
Pic: Shutterstock
Pic: Shutterstock
Walmart yesterday announced a non-cash impairment of about $290 million, primarily because of the trade name of Flipkart-owned fashion portal Jabong. The impairment and expenses linked to the acquisition of Flipkart affected Walmart’s bottomline despite its international sales rising by 1.3 per cent to $29 billion in the third quarter of fiscal 2019-20.

Walmart’s overall operating income declined by 5.4 per cent to $4.7 billion due to the impairment charge in that quarter.

“Excluding the impairment charge, operating income would have increased slightly. As expected, the inclusion of Flipkart negatively affected operating income,” said Walmart, adding that besides the impairment charge there is no additional change in impact from Flipkart on its bottomline.

After acquiring Flipkart last year, Walmart had said a loss of $0.60 a share is expected due to Flipkart, which translates to a total loss of $1.77 billion for the financial year ending January 31, 2020. Walmart had acquired 77 per cent stake in Flipkart for $16 billion in August last year, valuing the company at $22 billion.

Flipkart had acquired Jabong in 2016 for about $70 million, and the unit was working under the management of its fashion portal Myntra.

"Excluding the impairment charge related to Jabong, third quarter international operating income was better than plan, but declined 16 per cent year-over-year in constant currency and 21 per cent on a reported basis due primarily to the expected dilution from Flipkart as well as the overall gross margin..." Walmart Inc executive vice president and chief financial officer Brett Biggs said in a statement.

Fibre2Fashion News Desk (DS)


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