Jabong and Myntra were parallel fashion brands promoted by Flipkart under the management of the Bansals before Walmart acquired Flipkart. Both fashion platforms were organically acquired by Flipkart and were run as a separate business, with a CEO, Ananth Narayanan, to look after the two fashion platforms.
Once Walmart came in, the two entities were merged into Flipkart Fashion, and the CEO exited. After that, the company decided to focus on Myntra, and not Jabong. This led to parent company Walmart taking a $290 million hit on its books.
“We continue to see strong growth in both sales and units across both Flipkart and Myntra fashion and remain confident about performance. Since there was value ascribed to the Jabong name at the time of the Flipkart acquisition, we are taking a non-cash impairment charge on the trade name,” Walmart Inc EVP and CFO Brett Biggs said in a statement.
The direct result of this is that Walmart’s overall results for the third quarter took a hit. The company recorded a marginal 1.3% increase in its revenue from international operations, but its operating income fell to $4.7 billion, a drop of 5.4%. If the company had not taken this impairment on its books, the operating income would have ended with a positive figure.
Adding Flipkart to its stable has definitely affected the US giant’s earnings. However, the company is quite upbeat about the prospects the Indian e-commerce entity will bring to its working in the future. The company is expected to report a loss of $1.77 billion on account of Flipkart in its results for the financial year that will end on January 31, 2020. This will translate into $0.60 per share, which the company has already declared its stakeholders.
Apart from the main ecommerce business, Flipkart has the digital payments arm PhonePe, which is gaining traction. PhonePe already has 55 million monthly active users on its platform and it is adding another 3 million each month. Walmart may see great prospects for this payment app.