Closure of Flipkart's business during COVID-19 lockdown affects Walmart International's Q2 sales

Global retailer Walmart reported a 6.8 percent decrease in its international net sales at $27.2 billion as the coronavirus lockdown stonewalled operations of its Indian domestic e-commerce venture Flipkart.

"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," the company said in a statement. The other reason cited for the decline was a change in currency rates, which affected the net sales by around $2.4 billion.

e-commerce contributed 12 percent of total sales of Walmart International led by omnichannel capabilities. The management said that since re-opening, the gross merchandise value at Flipkart has exceeded pre-COVID levels. It, however, didn't disclose related numbers.

The total revenue of Walmart stood at $137.7 billion, an increase of $7.4 billion, or 5.6 percent.

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Following the onslaught of COVID-19, the Ministry of Home Affairs (MHA) had announced a nationwide lockdown on March 24. Even though it exempted delivery of essential goods, including food, medicine and medical equipment through e-commerce during the first phase of the lockdown, delivery boys reported hindrance on the roads from the administration.

The decision was criticised by many as e-commerce is regarded to be a safer alternative than visiting stores while following social distancing norms.

The ban was gradually lifted in May but conditions applied. The deliveries were still not allowed in containment zones.

Walmart acquired Flipkart in May 2018 at a valuation of $24.9 billion. It had invested $16 billion for a majority stake in Flipkart.

The company recently announced that it will lead a $1.2 billion fresh investment in Flipkart. This fresh investment is expected to see participation from a group of existing shareholders. It will be funded in two tranches over the remainder of FY21.