PhonePe lines up for wider financial services play; Walmart takes a hit on Jabong merger
Flipkart owned PhonePe will soon launch financial services for its 55 million strong monthly active user base, even as the digital wallet onboards three million users every month, Walmart president and CEO Doug McMillon said.
The Bentonville, Arkansas headquartered retailer reported its earnings for the third quarter of financial year 2020 on Thursday.
“We’re excited about what’s happening at Flipkart and PhonePe. We also continue to see tremendous growth with PhonePe. The company is acquiring more than three million new customers per 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 in his comments on the Q2 earnings.
Walmart acquired a 77% stake in Flipkart in May 2018 for $16 billion and increased its stake to 81.3% in late 2018.
The company also took a $290 million pre-tax, non-cash impairment on account of the merger of the operations of apparel retailer Jabong with Myntra and writing off the value for the brand name. “Earlier this year, we decided to consolidate backoffice functions for Myntra and Jabong to drive efficiencies… Since there was value ascribed to the Jabong name at the time of the Flipkart acquisition, we are taking a non-cash impairment charge on the trade name,” Walmart CFO Brett Bigs said.
The company reported a 2.5% increase in revenues at $128 billion for the third quarter of the financial year. Its operating income declined 5.4% to $4.6 billion over the corresponding period in the previous year. It reported a 3.3% increase in net sales for the quarter at close to $127 billion while international sales rose 1.3% during the quarter to $29.1 billion.
“Flipkart recently completed its best-ever Big Billion Days sales event which resulted in nearly 75 percent growth in new customers compared to last year’s event, including good strides in driving growth from Tier 2 cities. Because of calendar shifts, two days of the event affected Q3 net sales this year with the remaining four days to be reported in the fourth quarter,” McMillon said.