US retail giant Walmart has taken a non-cash impairment charge of USD290 million for the value of the 'Jabong' trade name in the third quarter, Chief Financial Officer Brett Biggs disclosed in an earnings call Thursday.
"Excluding the impairment charge related to Jabong, third quarter international operating income was better than plan, but declined 16 per cent year-over-year in constant currency and 21 per cent on a reported basis due primarily to the expected dilution from Flipkart as well as the overall gross margin," the statement said.
Earlier, Walmart had adjusted its EPS (earnings per share) for an impairment charge related to the Jabong.com trade name as a result of a strategic decision to focus on the Myntra.com fashion platform.
Walmart chalked up 77% of Flipkart Group’s USD 24.1 billion in assets to intangibles and goodwill when the US retail giant purchased the Indian ecommerce marketplace for USD16 billion in May last year.
“At the end of last year, we decided to consolidate back-office functions for Myntra and Jabong to drive efficiencies. This year, after looking at fashion demand trends, customer overlap, and marketing investments, we have decided to focus on a single premium fashion-focused platform – Myntra,” a Flipkart spokesperson said in a statement. “There will be no impact on employees as we have a unified workforce for Myntra and Jabong which can work across all our existing and new businesses.”
Operating income declined 5.4%, in part due to a non-cash impairment charge for Walmart International, the company said.
“As expected, the inclusion of Flipkart negatively affected operating income,” Walmart said. “Expectations for the dilution from Flipkart remain unchanged, excluding a non-cash impairment charge,” the company said.
“Beyond just our current results, the Indian market represents a significant opportunity for growth... The Big Billion Days sale was a success again this year, powered by shoppers and sellers from Tier 2 cities and beyond, with nearly 75% growth in new customers versus last year,” said Walmart President and CEO Doug McMillon in the earnings call.
McMillon also said PhonePewas acquiring more than three million new customers each month. “With over 55 million monthly active users, we’re quickly looking for ways to monetize the customer base, including an offering of financial services,” he said.