Categories Retail

Walmart sells its struggling UK unit Asda to rival J Sainsbury

Given the changing dynamics of the retail industry, Walmart (WMT) is gearing up to take the lead over other retailers. In the past, the company has made a series of moves to fight its rival Amazon (AMZN) and boost its e-commerce growth. Walmart’s latest strategic plan, which seems to be a landmark shift, is to withdraw its business from the European markets.

Walmart has failed to revive the fortune of its U.K. and Brazil business — its two major markets — forcing it to shed control over its U.K. store Asda, which it acquired in the 90s with an aim to multiply its international operations. Under the deal terms, Asda will merge with J Sainsbury Plc and in the combined entity, Walmart would own a minority stake (42%). The deal values Asda at $10 billion.

Courtesy – Wikimedia Commons

With this strategic move, Walmart can easily shift its focus towards faster-growing markets that will offer growth and also refrain from making investments to drive growth in challenging markets. Earlier, Walmart retreated from other international markets like South Korea and Germany.

The retailer might seek a similar end for its struggling Brazilian unit that has close to 460 stores. Rumors suggest that Walmart may sell its Brazilian unit to Advent International.

To run its international unit, Walmart has shown a keen interest in investing in India and China. It is close to sealing a $20 billion deal with an Indian e-commerce giant Flipkart. When the deal is closed, Walmart seeks to have three to four seats on the board that would comprise of 10 members.

Walmart also expanded its association with China’s e-commerce giant JD.com to serve the Chinese consumers with high-quality products and enhancing their shopping experience. During fiscal 2018, the company’s international business generated $33 billion and total revenue amounted to $500.3 million.

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