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Walmart shares drop as Flipkart deal prompts cut in earnings forecast, says report
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Walmart shares drop as Flipkart deal prompts cut in earnings forecast, says report
Oct 16, 2018 7:58 AM

Walmart Inc lowered its earnings forecast for the year on Tuesday to include the impact from its acquisition of Indian e-commerce company Flipkart, and said its e-commerce growth next year will be slower than the current fiscal year.

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In May, Walmart acquired Flipkart for $16 billion, its largest-ever deal, in order to compete with Amazon.com Inc in an important growth market.

The retailer now expects to earn between $4.65 and $4.80 per share for fiscal 2019 from an earlier forecast of $4.90 and $5.05 per share.

Shares were down 2.5 percent at $91.5 in premarket trading.

Walmart also expects a lower growth rate of 35 percent for its online business in fiscal year 2020. Earlier this year, it said U.S. online sales were on track to surge 40 percent for the current year.

In August, Walmart posted its best quarterly U.S. sales growth in a decade and raised its full-year sales and profit outlooks, showing it could hold its own against Amazon.

The company has benefited from lower unemployment and tax cuts that have put more money in U.S. consumers' pockets this year.

For fiscal 2020, Walmart expects comparable sales growth of 2.5 percent to 3 percent and expects earnings to decline by a low-single-digit percentage compared to fiscal 2019 on account of Flipkart.

The retailer will address investors at its Bentonville, Arkansas headquarters starting at 9:00 a.m.

First Published:Oct 16, 2018 4:58 PM IST

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