Walmart: Shopping For Less

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What's going on?

Walmart the US retailer of (almost) everything said on Tuesday that its profit in 2019 would be lower than it previously expected. Perhaps its in need of its own advice to save money, live better

What does this mean?

Walmarts purchase of Indian ecommerce retailer Flipkart earlier this year (in which Mart bought around three quarters of Kart for $16 billion Walmarts biggest-ever deal) is largely to blame for the anticipated profit hit. Wally Worlds quest for global dominance saw it outbid its nemesis, Amazon, for a foothold in India where the median consumer is just 28 years old, with plenty of happy shopping days ahead. But Flipkarts not making any money rather, its losing it. As if that weren’t enough, Walmarts expecting slower growth back home in the US. Put together, that adds up to the US mega-retailer earning less profit.

Why should I care?

The bigger picture: Walmarts in the market for growth.

Walmarts been on a shopping spree. Just in the last fortnight, its bought online plus-size retailer Eloquii and lingerie company Bare Necessities, and partnered with auto company Advance Auto Parts and movie studio Metro Goldwyn Mayer. Back in 2016, Walmart notably acquired ecommerce startup including its founder (previously an Amazon executive), whos been spearheading Walmarts numerous online initiatives ever since.

For markets: Buyer beware.

Dropping cash on companies is not without its risks. When one company proposes to another, they dream of seamless integration and living happily ever after but married life isnt necessarily all roses and champagne. When a deal is announced, its common for shares of the acquiring company to fall due to execution risk the possibility things might not go according to plan. Systems, personnel, and culture can all clash when brought together, and any potential benefits from the partnership (a.k.a. synergies) can be a long way off or non-existent.

Originally posted as part of the Finimize daily email.

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