Walmart sells Argentina unit to regional retail group; will take $1 billion hit

In this news, we discuss the Walmart sells Argentina unit to regional retail group; will take $1 billion hit.

BUENOS AIRES (Reuters) – Walmart Inc, the world’s largest retailer, on Friday announced it would sell its retail operations in Argentina to the owner of South American supermarket chain Grupo de Narváez, pulling out as the country is grappling with an economic crisis

The U.S. company did not disclose the deal size for the operation, where it has more than 90 stores, but said it would record a loss of around $ 1 billion after-tax and non-cash. related to divestment in its third fiscal quarter of next year.

Argentina, mired in the economic crisis since 2018, has been a difficult market for businesses in recent years. It is heading for an economic decline of almost 12% this year, exacerbated by the coronavirus pandemic, which would be the third consecutive year of recession.

The country is also grappling with a currency crisis, imposed stringent capital controls and recently emerged from sovereign default after restructuring more than $ 100 billion in foreign currency debt with local and international creditors.

Economic malaise and uncertainty hit businesses nationwide and led others to pull out, including LATAM Airlines Group, which said in June it would suspend local operations in Argentina.

Walmart Argentina began operations in 1995 and currently has around 9,000 employees in 92 stores, including the Changomas and Punto Mayorista chains.

With the acquisition, the family-owned Grupo de Narváez will own 656 stores, including supermarkets, clothing and appliance stores in nine countries, including Ecuador and Uruguay, and will employ more than 24,500 people. (bit.ly/2JCP8sh)

In 2018, Walmart pulled out of operations in neighboring Brazil by selling an 80% stake to private equity firm Advent International.

Report by Uday Sampath in Bengaluru and Adam Jourdan in Buenos Aires; Edited by Ramakrishnan M. and Jonathan Oatis

Original © Thomson Reuters

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