American retail giant Walmart's CEO Douglas McMillon has said Flipkart has been performing better than expected with the gross merchandise value or GMV exceeding that of pre-COVID-19 levels.
Talking to analysts at the company's second quarter earnings call Douglas said that profit for the international business was also better than expected, excluding the forex and discrete tax item impact. "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," he said.
In the second quarter of FY21 Walmart registered a 5.6 percent (YoY) revenue growth with the total revenue at $137.7 billion dollars. However, the international segment dipped by 6.8 percent with revenues at $27.2 billion dollars compared to $29.1 billion dollars in Q2 of FY20 largely attributable to the forex or currency impact. Flipkart's business also falls under the international sales segment for the parent company.
Walmart said that despite the challenging times it would continue to execute the strategy of building strong local businesses, and investments in India and China to grow the portfolios.
"For example, we're excited about the launch of Flipkart Wholesale, creating a B2B marketplace to help small businesses in India source directly from manufacturers and producers. We'll also continue to evaluate opportunities to strengthen our position across the portfolio," said Douglas.
Walmart also said that it was pleased with Flipkart's performance ever since it made the investment, and also the manner in which the team handled the COVID-19 environment in a really effective way. "We're staying close to the decisions that they're making and excited about the strategy going forward, and with the investment, just wanted to make sure that they've got enough room, enough cash to operate" he added.
Walmart though said it was not hung up on the short-term valuation and in the time to come people would understand the value of India business, be it Flipkart or Phone Pe. "This is a time when there's so much of an opportunity that the size of the prize in India is significant and we want to make sure that we're on our front foot and being aggressive," he said .