Walmart Inc. WMT, known for its bold moves to improve its operations, has divested its entire stake in JD.com, sources revealed. The move represents a significant shift in the US retail giant’s strategy and will allow Walmart to focus more on strengthening its core businesses in China, including Walmart China and Sam’s Club.
Experts also say the move reflects Walmart’s focus on allocating capital to other priorities. Although the retail giant has sold its stake in JD.com, it will continue to have a business relationship with the Chinese e-commerce company, according to sources.
In the headlines
Walmart’s first investment in JD.com dates back to 2016, when the U.S. retailer sold its Chinese online grocery store Yihaodian to JD.com in exchange for a 5 percent stake in the e-commerce giant. The partnership allowed Walmart to leverage JD.com’s extensive fulfillment and delivery network, which was crucial as Chinese consumers increasingly shifted to online shopping. However, given JD.com’s recent struggles and Walmart’s own success in China, particularly with Sam’s Club, the decision to divest seems to align with the company’s evolving strategic priorities.
Walmart’s exit from JD.com also underscores the growing challenges in China’s highly competitive e-commerce market. JD.com is facing increasing pressure from rival platforms such as Pinduoduo and social media-driven e-commerce initiatives from Xiaohongshu and Douyin. However, sources have revealed that despite the end of Walmart’s equity investment, JD.com remains optimistic about future collaborations.
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International growth on track
Walmart’s decision to sell its stake in JD.com underscores its commitment to strengthening its physical and digital presence in China while navigating the difficulties of the competitive e-commerce landscape. As the company recalibrates its focus, Walmart’s future in China appears poised for continued growth, supported by its robust operations and strategic investments in the region.
In the last quarter, Walmart’s international segment net sales grew 7.1% to $29.6 billion. On a cc basis, net sales grew 8.3%, driven by Walmex, China and Flipkart. Stores and e-commerce contributed equally to the increase in sales. The segment’s e-commerce sales grew 18% across store pickup and delivery and marketplace. E-commerce penetration increased across all markets. The company saw strength in grocery and consumer goods and better growth in general merchandise.
Packing
Walmart benefits from its highly diversified business with contributions from different segments, channels and formats. The company’s robust omnichannel initiatives have driven an increase in customer traffic in both stores and digital channels. The strategic focus on improving delivery services has been particularly rewarding, leading to a steady increase in market share in the grocery space. In addition, newer ventures such as the marketplace, advertising and memberships have contributed to diversified earnings and further strengthened the resilience of Walmart’s business model.
Shares of this Zacks Rank #3 (Hold) company have risen 15.3% over the past three months compared to the industry’s growth of 12.9%.
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