US-based retail major Walmart said that limited operations of Flipkart in India for the duration of the first quarter (February-April) while the country was in lockdown due to COVID-19 outbreak, have adversely impacted the growth in its international business.
The Government in India had restricted the online firms to delivering only essential merchandise during the lockdown that began 25 March.
Sale of mobile phones, electrical gadgets and apparels bring in the bulk of revenue for online firms like Flipkart or Amazon and the curb of selling these hit margins and revenues in a drastic way for these e-commerce players.
“As a result of the crisis and towards the end of the quarter, we had pretty extensive stores and operational closures in markets like South Africa, India … and our Flipkart operations were impacted by restrictions on non-essential deliveries,” said Brett Biggs, Executive Vice President and Chief Financial Officer, Walmart while speaking in the company’s first quarter earnings call.
Walmart follows February to January period as its financial year.
Online operations for Walmart International contributed 9 per cent of the total segment net sales, led by growth in China, Canada, UK and Mexico.
The retail giant said that it is expecting that the volatility will continue in several international markets in its second quarter as well (May-July).
Walmart also maintained during its investor presentation that that gross profit rate for its international business has risen primary due to its Flipkart India business.
Walmart’s net income increased to US $ 3.99 billion for Q1 2020 from US $ 3.84 billion registered the previous year. Its revenues grew 8.6 per cent to US $ 134.6 billion from US $ 123.9 billion, exceeding expectations of US $ 132.80 billion.