Walmart sells $3.7 billion stake in JD.com

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by Kim Souza ([email protected]) ago 0 views 

Walmart sent a signal that it’s reducing investments in China by selling 144.5 million shares of JD.com, which totaled about $3.7 billion. The trade happened Wednesday, ending the retail giant’s eight-year partnership.

The world has changed since Walmart first took a stake in China’s e-commerce platform JD.com in 2016. Walmart ramped up its ownership to 10% as it sought to grow its retail business inside China. Since that time, China has experienced a volatile economy, slower consumption patterns, and a prolonged shutdown from the COVID-19 pandemic.

Walmart said divesting the JD shares indicates the company plans to focus on Walmart China, Sam’s Club, and allocate funds to other priorities. Walmart execs have said the Sam’s Club format is performing well in China for online and physical sales. Market analysts estimate Sam’s Club achieved a compounded annual growth rate of around 30% in the past three years. Sam’s Club China posted annual sales of $11.1 billion (US) in 2023. More than 50% of Sam’s Club orders in China came from online.

Walmart opened its first Sam’s Club store in China in 1996 and now operates 48 locations in the country.

“Walmart’s exit from JD.com also highlights the growing challenges in China’s highly competitive e-commerce market. JD.com has faced increasing pressure from rival platforms and social media-driven e-commerce initiatives. However, despite the end of Walmart’s equity investment, JD.com remains optimistic about future collaborations,” Zacks noted in its analysis.

India has become a bigger priority for Walmart’s international business in recent years. The company made a $16 billion investment in Indian retailer Flipkart in 2018 and its mobile payment platform PhonePe. Walmart CEO Doug McMillon said Aug. 15 that Flipkart delivered double-digit sales revenue growth during the April-June quarter. Its contribution margin also expanded significantly in the second quarter.

McMillon said Flipkart, China, and WalMex led the 8.3% sales gains on a constant currency basis for the recent quarter. He said during the quarter, Flipkart grocery grew over 50% on the back of next-day delivery in over 200 cities.

“Flipkart again delivered a positive contribution margin, and PhonePe continues to deliver amazing growth in total payment volume,” McMillon said.