Retail major Walmart, which owns Flipkart, said on Saturday during its earnings call for the April-June quarter that it felt the impact of the lockdown in India on its net sales internationally. For a significant time that quarter, e-commerce firms were only allowed to sell essential goods.
Walmart said that its international sales increased by 1.6% in constant currency. In India, e-commerce firms were allowed to start sales from mid-May onwards, which meant that half the quarter had passed.
“Despite operational limitations in several markets due to the crisis, including the government mandated closure of Flipkart, net sales increased 1.6% in constant currency including nearly 40% growth in eCommerce,” Walmart’s CEO Doug McMillon said.
However, CFO Brett Briggs said that Flipkart’s gross merchandise volumes (GMV) after they were allowed to operate in mid-May even exceeded pre-COVID-19 level.
“In India, Flipkart reopened in mid-May, after which we saw GMV exceeding pre COVID-19 levels, excluding fuel as this performance demonstrated the resilience of the business with growth in a challenging period,” he said.
In July, Flipkart Group raised an additional $1.2 billion in an equity round led by Walmart. For Flipkart, the last such fundraise was in 2018, when it was acquired by Walmart for $16 billion. With the new fundraise, Flipkart said that it valued the company at $24.9 billion.
McMillon said that with the investment, they just wanted to make sure that Flipkart has enough cash to operate.
“This is a time when there's so much of an opportunity that the size of the price in India is significant. We want to make sure that we're on our front foot being aggressive. So, we're not really getting hung-up on the valuation in the short-term. Over time, I think everybody will understand just how valuable that business in India is, whether it's the Flipkart portion or the PhonePe portion,” McMillon said.
In FY20, Flipkart said that it reported 45% growth in active customers, as well as 30% growth in transactions. It added that it recently surpassed 1.5 billion visits per month.
Reporting its Q1 figures, Walmart said net sales was down by 6.8% due to fluctuations in currency, which affected the net sales by around $2.4 billion.
Walmart’s total revenue stood at $137.7 billion — an increase of $7.4 billion (5.6%). Walmart said it saw nearly 40% growth in ecommerce.
"Net sales included the effects of the government-mandated closure of the company's Flipkart business in India for a portion of the quarter, as well as similar actions in markets in Africa and Central America," McMillon said.