FINANCE

Walmart sells majority stake of Brazilian business

BY Deena M. Amato-McCoy

Walmart has entered into a new international deal, the company’s latest move to reshape its global portfolio.

The discount giant has sold an 80% stake of Walmart Brazil to private equity firm Advent International. Upon completion of the deal, Walmart will retain a 20% stake in the company.

Through the transaction, Walmart expects to record a non-cash, net loss of approximately $4.5 billion in the second quarter. A significant portion of the net loss is due to the recognition of cumulative foreign currency translation losses. The final loss could fluctuate significantly due to changes in currency exchange rates up to the date of close, according to Walmart.

The deal, which is subject to regulatory approval in Brazil, is expected to close later this year. The transaction value was not disclosed.

Advent has a strong local presence and extensive experience in retail investment both in Brazil and internationally. It has completed 75 investments in 22 countries. The company help the discounter to grow the division, according to Walmart.

“Walmart is committed to building strong, resilient businesses that continuously adapt to local customers’ needs in a rapidly changing world,” said Enrique Ostale, executive VP and CEO of Walmart UK, Latin America and Africa. “We will retain a stake in Walmart Brazil and continue to share our global retail expertise, giving our Brazil business the best opportunity for long-term growth, providing opportunities for associates and low prices for customers.”

This is Walmart’s third international deal in two months. In April, the discount giant announced plans to sell its wholly-owned U.K. subsidiary, Asda Group Ltd., to J Sainsbury PLC in a deal valued at about $10 billion. Under the terms of the agreement, which is subject to various approvals, Walmart would hold a 42% share of the combined business.

In May, Walmart signed a definitive agreement to buy an initial stake of approximately 77% in Indian e-commerce firm Flipkart for $16 billion. Later that month, SoftBank Group Corp. said it would sell its roughly 20% stake in Flipkart to Walmart. While the company didn’t disclose terms of the sale, SoftBank’s investment in Flipkart was worth around $4 billion.

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GameStop sales and profit fall, makes leadership changes

BY Deena M. Amato-McCoy

A drop in sales of video game hardware and software took a toll on GameStop’s first quarter results.

For the quarter ended May 5, GameStop’s net income fell to $28.2 million, or 28 cents per share, from $59 million, or 58 cents per share, for the same period a year ago. This drop included store closure charges, and other charges related to previously disclosed management changes, of $12.6 million.

The retailer’s total global sales decreased 5.5% to $1.93 billion (decreased 7.5% in constant currency), which resulted in a consolidated comparable store sales decrease of 5.3% (2.6% decrease in the U.S. and 11.6% decrease internationally). This is compared to analysts’ estimated 4.2% drop in same-store sales.

This decrease was due to a 7.9% drop in new hardware sales, and a 10.3% decrease in new software. Both of these categories were impacted by the highly successful launch of the Nintendo Switch in the first quarter of fiscal 2017.

GameStop also ended the quarter by naming board member Shane Kim as its interim CEO. Michael Mauler stepped down as CEO in May, after only three months on the job. Rob Lloyd has been promoted to chief operating officer and chief financial officer.

“As the board conducts its search to fill the position on a permanent basis, Shane will work closely with Rob…and Dan Kaufman, our executive VP, chief administrative and legal officer,” said Dan DeMatteo, the company’s executive chairman. “Together, Shane, Rob and Dan, along with the other members of our senior leadership team, will ensure the organization is focused on driving forward our business strategy and key priorities.”

Looking ahead, GameStop still expects earnings for fiscal 2018 to be substantially back half weighted for the fiscal year. Expectations are based on the overlap of the Nintendo Switch launch in the first half of the year and expected strength of the title line up in the second half of the year.

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Home furnishings giant pulls back on store openings

BY CSA Staff

Ikea is taking it a little bit slower in the United States.

The Swedish home furnishings retailer has scrapped plans to open new stores in Nashville; Cary, N.C.; and Glendale, Ariz., reported USA Today.

Ikea spokesperson Latisha Bracy, in an emailed statement to USA Today, acknowledged the “rapidly changing” retail environment the company faces. Ikea has been investing in e-commerce and exploring opening smaller stores in urban centers where it can be closer to customers.

“To be fit for long-term growth, we are creating a new business model to make sure we’re accessible and convenient for our customers today and in the future,” she said.

To read more, click here.

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