Walmart may sell its Central American business

Walmart is considering selling its business in Central America, Reuters reported, a sign that the retailer may further reduce its overseas presence and invest more in key regions.

Walmart’s Mexico and Central America division said in a statement on January 24 that they are studying strategic alternatives for their businesses in Honduras, El Salvador and Nicaragua, and the options currently under consideration include establishing joint ventures, establishing strategic partnerships or alliances, and selling or other transactions. At the same time, Walmart’s Mexico and Central America division plans to prioritize its businesses in Costa Rica and Guatemala, as well as expansion in Mexico.

“We believe there may be further growth opportunities in Honduras, El Salvador and Nicaragua that can be better captured under different architectures,” Guillerme Loureiro , CEO of Walmart in Mexico , said in the statement.

It is reported that Walmart's business in Central America and Mexico has always been a stable source of profit. In the third quarter of 2021, Walmart's revenue in Central America increased by 13.9% year-on-year to US$1.5 billion, operating income increased by 22.4%, and earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 14.6%. The profit margin was 9.1%.

In recent years, Walmart has been increasing its investment in e-commerce capabilities in the United States to compete with Amazon. At the same time, Walmart has withdrawn from unprofitable markets such as the United Kingdom and Brazil, and has focused its investment on markets with great potential such as India and China. For example, Flipkart, which was acquired by Walmart, has become the largest e-commerce company in India.

Bloomberg analyst Jennifer Bartashus said in a report that business in Honduras, El Salvador and Nicaragua may only account for 8% of Walmart's sales in Mexico and Central America. She said that Walmart's adjustment is a good move, "These moves allow Walmart to focus on Mexico, Costa Rica and Guatemala, which have leading market shares and strong e-commerce and fintech growth potential."

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Central America

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