Wal-Mart chief executive officer Doug McMillon at the retailer's annual general meeting.

Walmart Inc. isn’t finished reshaping its global portfolio.

Following last week’s $16 billion deal to acquire a majority stake in Indian e-commerce company Flipkart and the retailer’s agreement to merge its Asda subsidiary in the U.K. with Sainsbury’s Plc, Walmart on Thursday said it now is turning to its Brazilian operation. Brett Biggs, executive vice president and chief financial officer, said the retailer is putting its long-struggling Brazil business into play.

“We’re continually reviewing our portfolio and consistent with that, we’re currently considering options for our business in Brazil,” he said.

This isn’t the first time Walmart has tried shopping a major stake in the business, however, which could be a tough sell, since stores opened during Brazil’s economic boom were located in less desirable locations.

The company began its Brazil business in 1995 and operates 465 stores under the banners Sam’s Club, Walmart, Big, Bompreco, Hiper Bompreco, Magazine, Maxxi, Mercadorama, Nacional, Hiper TodoDia, Supermercado TodoDia, TodoDia and Posto. Walmart’s operating losses started in 2009. The stores generated about $9.4 billion in revenue in 2016, but have struggled to turn a net profit. Advent International apparently was close to acquiring 50 percent of the Brazil business, but Walmart may be having trouble unloading Brazil, as it reportedly owes up to $3 billion in back taxes to state governments, according to Reuters.

Its international approach seems to be the borrow-from-Peter-to-pay-Paul philosophy, with the sales of Asda reportedly financing its Flipkart investment. There’s also the pending sale of its Canadian bank.

Walmart revealed its latest strategic move as it reported first-quarter results that at first cheered Wall Street by beating estimates. But Wall Street had second thoughts about the numbers by the market’s close and sent the stock down 2.38 percent to $84.08 after the morning rally had pushed shares 1.94 percent higher to $86.13.

Walmart saw an increase in profit in the first quarter to $1.14 a share on revenue of $122.7 billion, from $1.12 a share on revenue of $120.5 billion, which was enough for investors to push the stock price higher, despite an overall decline in profit of 30 percent that was attributed to the impact of the retailer’s investment in JD.com. Walmart recorded $1 in profit on revenue of $117.5 billion in the same period last year.

A lot happened during the 13 weeks, including the potentially transformative event — the company’s $16 billion investment in Indian e-commerce platform Flipkart, which sets Walmart up to reap the rupees of the country’s burgeoning middle class; competitor Amazon was also reportedly interested in Flipkart.

Walmart U.S. same-store sales increased 2.1 percent; comparable traffic rose 0.8 percent, while Sam’s Club’s comps increased 3.8 percent, and net sales at Walmart International of $30.3 billion gained 11.7 percent, with eight of the eleven markets posting positive comps, including the retailer’s four largest markets. E-commerce sales grew 33 percent in the first quarter, and are expected to increase about 40 percent for the full year.

“Comparable-store sales improvements across the board validate the premise that stores still matter,” said Moody’s lead analyst Charlie O’Shea, adding that Walmart is also “demonstrating that it is committed to becoming the leader in multichannel retail. E-commerce growth of 33 percent in tandem with flattish gross and operating margins, continues to reflect Walmart’s significant spending to enhance its online capabilities, invest in people, price, and stores, and battle Amazon for market share.

“Competition in retail remains acute on all fronts,” O’Shea added. “Walmart is well-positioned to thrive against all competitors in this environment.”

Walmart’s equity investment in Chinese e-commerce platform JD.com was responsible for the 30 percent decline in profit. Higher revenues were more than offset by a 47 cent loss related to the investment. Since taking a stake in JD.com in fiscal year 2017, the market value of the company’s investment increased $3.7 billion as of January 31 of this calendar year. Beginning in fiscal year 2019, due to a change in U.S. accounting principles, Walmart is required to include unrealized gains or losses of certain equity investments in net income. The company in the first quarter recorded an unrealized loss of $1.8 billion due to a decline in the JD.com stock price during the quarter.

Investors seemed happy with the 33 percent increase at Walmart U.S. e-commerce. According to retail experts, Wall Street has the expectation that Walmart deliver Amazon-like margins. After reporting outsize increases, e-commerce growth in last year’s fourth quarter slowed to 23 percent — after posting 50 percent growth in the prior quarter — and Wall Street punished Walmart’s shares.

The apparel and home sections of a newly redesigned Walmart web site and app were revealed, while the new Lord & Taylor store that will offer a broader assortment of premium brands was teased on the site this week.

“Lord & Taylor has the potential to become a high-end digital flagship residing within Walmart.com, and would function as a better digital master brand,” Carol Spieckerman, president of Spieckerman Retail, said, adding that the approach would be a departure from Amazon’s more item-driven bazaar approach. “The question is whether Lord & Taylor brings more benefit to Walmart as a brand or as a house of brands.” Both propositions are likely in play, she said, but if the majority of brands and products are available on other digital platforms, “price/value vigilance will be a mandate. That’s where Walmart’s digital data analytics prowess will make all the difference.”

Douglas McMillon, the retailer’s chief executive officer, cited Walmart’s home-grown apparel brands for women, plus-size, men and kids. “We also recently introduced new apparel brands with improved design, quality and value,” he said. “Customer experience scores continue to improve as we’ve lowered prices and taken steps to make shopping with us easier and more enjoyable.”

Grocery is a key battleground between Walmart and Amazon. “We’re on track to increase online grocery pickup by around 1,000 stores this year to reach more than 2,100 locations across the U.S. with the service,” said McMillon. “We’re also rolling out grocery delivery to about 800 stores by year-end, allowing us to cover 40 percent of the U.S. population with delivery. The e-commerce food business we’ve been building is important not only because of the volume it’s driving but, strategically, it’s helping to grow the number of omnichannel customers we serve.”

Amazon acquired Whole Foods last year and has opened cashier-less groceries. However, experts say grocery has a steep learning curve, and Walmart has a big lead over Amazon in terms of experience, and there’s the fact that it accounts for 56 percent of total U.S. sales. Still, Walmart’s test of mobile checkout service Scan & Go, was expanded to 100 stores in January, but was ultimately deemed unsuccessful and eliminated.

Gross margin rate declined 23 basis points primarily due to price investments and higher transportation expenses as a result of higher fuel costs and third-party transportation rate pressures. Operating expenses deleveraged about 11 basis points largely due to investments in e-commerce and technology. Stores leveraged expenses in the quarter as productivity improvements more than offset the impacts of increased associate wages.

Sam’s Club comps improved 5.2 percent, excluding fuel and a 140 basis point decrease for tobacco.

Walmart’s investment in Flipkart is expected to negatively impact fiscal year 2019 earning per share by about 25 cents to 30 cents, if the transaction closes at the end of the second quarter.

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