Walmart sells $3.7 billion stake in JD.com

Walmart signaled it is reducing its investments in China by selling 144.5 million shares of JD.com worth about $3.7 billion. The sale took place on Wednesday, ending its eight-year partnership with the retail giant.

The world has changed since Walmart first acquired a stake in Chinese e-commerce platform JD.com in 2016. Walmart increased its stake to 10% to expand its retail business in China. Since then, China has experienced a volatile economy, slower consumption patterns and a prolonged shutdown due to the COVID-19 pandemic.

Walmart said the sale of the JD shares shows that the company plans to focus on Walmart China and Sam’s Club and allocate funds to other priorities. Walmart executives have said the Sam’s Club format works well in China in both online and physical sales. Market analysts estimate that Sam’s Club has achieved a compound annual growth rate of around 30% over the past three years. Sam’s Club China reported annual sales of $11.1 billion in 2023. More than 50% of Sam’s Club orders in China came 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 underscores the growing challenges in China’s highly competitive e-commerce market. JD.com faces increasing pressure from competing 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 increasingly important for Walmart’s international business in recent years. The company invested $16 billion in Indian retailer Flipkart and its mobile payments platform PhonePe in 2018. Walmart CEO Doug McMillon said on August 15 that Flipkart achieved double-digit revenue growth in the April-June quarter. Contribution margin also rose significantly in the second quarter.

McMillon said Flipkart, China and WalMex led the currency-neutral revenue growth of 8.3% last quarter. He said during the quarter, Flipkart’s grocery business grew over 50% thanks to next-day delivery in over 200 cities.

“Flipkart has once again achieved positive margin and PhonePe continues to see amazing growth in total payment volume,” said McMillon.

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