India is likely to surpass China and emerge as the largest market internationally this year, Walmart CFO John David Rainey said at the company’s annual investor conference call.
“I believe India is going to be the largest market in the world this year, surpassing China. It’s a really promising opportunity in the future,” Rainey, who is also the executive vice president of Walmart Inc, said at the company’s annual institutional investors call.
He said that ecommerce marketplace Flipkart and online payments app PhonePe, both owned by Walmart, are market leaders and that both companies have huge opportunities to tap going forward. Rainey was responding to an analyst’s query about the company’s international markets.
Rainey’s comments come after the company’s earnings call two weeks back when he said that Walmart’s international operations took a hit because of PhonePe’s hive-off from Flipkart.
During the earnings call, Rainey also said that Flipkart’s positive contribution margin has improved and that Walmart has taken note of the Indian ecommerce giant’s progress.
A positive contribution margin means the product being sold at a certain price is able to make contributions or generate money after deduction of fixed costs.
Walmart International, which includes Flipkart, reported net sales of $27.6 billion for the quarter ended December 31, 2022, a growth of little over 2% on a year-on-year basis.
In December, both Flipkart and PhonePe said that they would formally separate and the payments firm has raised $450 million in new funding since then from investors like General Atlantic, Tiger Global, Ribbit Capital and TVS Capital Funds.
The separation and the subsequent shift of PhonePe’s registered legal entity from Singapore to India also led to Walmart footing a $1 billion tax bill to the Indian government.
PhonePe is also in the midst of raising $1.5-2 billion funding with Walmart and private equity General Atlantic infusing about $1 billion, while the rest constitutes secondary sale.
ET reported on November 29 that Flipkart will facilitate a $700 million employee stock buyback as part of digital payments platform PhonePe’s ongoing financing round.
On December 23, Flipkart CEO Kalyan Krishnamurthy informed employees through an internal note that all those who hold stock options in Flipkart will be paid cash equal to the value of PhonePe within those holdings, as the digital payments platform is no longer a part of the ecommerce company.
The entire transaction will also lead to a readjustment in Flipkart’s valuation to about $33 billion from $37.6 billion earlier, as PhonePe will no longer be part of the Flipkart group, which also houses fashion ecommerce company Myntra and online travel portal Cleartrip.
Similar to other tech companies around the world, Flipkart too has been trimming costs as the industry faces one of its toughest downturns.
ET reported on February 23 that the top 30% of employees at the company, which includes the senior leadership, won’t be handed out any increments this year.
The change in its annual appraisal cycle was informed to employees by Flipkart’s chief people officer Krishna Raghavan in an internal note, which ET had reviewed.
Raghavan said the company wants to be “prudent” in managing its resources amid tough macroeconomic conditions.
Globally, Walmart reported $164 billion in total revenue during the fourth quarter– an increase of over 7%.
Walmart reported a 17% growth in its US ecommerce business during the fourth quarter.