Although Walmart is currently the largest retailer in the world, they have still somewhat struggled to compete with Amazon. Today, Walmart announced that they will be moving out of Brazil for the most part. On the other hand, Amazon is expanding in Brazil. The company will be selling 80 percent of its business in Brazil to Advent International, a private equity firm. Walmart will keep the other 20 percent.
The deal should close later this year, but as of right now, Walmart and Advent International are not providing the public with any information about the terms of the deal. However, Walmart did say that they will “record a non-cash net loss of $4.5 billion in Q2” because of the deal. For the most part, the losses are due to foreign currency translations.
Even though Brazil is the largest single market in the Latin American region, Walmart has realized that it is not easy to boost sales and business in the area as much as they would like. Enrique Ostale, EVP and CEO of Walmart UK, Latin America, and Africa, said, “Walmart is committed to building strong, resilient businesses that continuously adapt to local customers’ needs in a rapidly changing world. We will retain a stake in Walmart Brazil and continue to share our global retail expertise, giving out Brazil business the best opportunity for long-term growth, providing opportunities for associates and low prices for customers.”
It appears that Advent believes that with this deal it will be able to generate better results for the company and become a successful retailer in Brazil. Advent said, “We plan to invest in the business, work with the Walmart Brazil management team, associates, Walmart and our industry advisors to create a more agile and modern company to accelerate its development and improve the customer experience.”
As Walmart continues to invest in areas around the globe that are more profitable and pull away from those that aren’t as profitable, it will be interesting to see the company’s next moves.
It will be especially interesting since Amazon has been expanding in the Brazilian market. The company has apparently been considering opening a 50,000 square meter warehouse in Sao Paulo and now allows international shipping to Brazil.
