Walmart's JD exit displays derisking smarts
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Chan Ka Sing
HONG KONG, Aug 21 (Reuters Breakingviews) -It may be tempting to scream "decoupling" after a quick glance at Walmart's WMT.N decision to offload its entire stake in JD.com 9618.HK, JD.Ofor $3.6 billion, per IFR. The $600 billion U.S. retail behemoth has, after all, been a shareholder in the Chinese e-commerce group since 2016. It's also selling after its strategic partner's stock has dropped 70% from a 2021 peak - and for not much more than the shares were worth when it first got them. But the move is actually a good example of derisking.
Unlike other global retailers such as Tesco TSCO.L and Carrefour CARR.PA, Walmart is not leaving China's ultra-competitive consumer market. It owns, for example, almost 400 stores in the People's Republic, including its membership-only warehouse chain, Sam's Club, and these are performing well: net sales grew 18% in the most recent quarter, while JD.com's top line barely budged.
That's a marked change from when the pair's relationship began eight years ago. Walmart was under pressure: back home, Amazon AMZN.O had surpassed its market value for the first time in July 2015; meanwhile, in the People's Republic a fast-growing JD.com was performing better than the Arkansas-headquartered company's China-focused online operation, Yihaodian. So as part of a broader alliance Walmart CEO Doug McMillon handed control of the unit to JD.com in return for a 5% stake in its new partner, which it doubled later that year.
The People’s Republic has since become a very different proposition. Consumer confidence has faltered as the $17 trillion economy stutters on the brink of deflation, while major e-commerce firms engage in brutal price wars to entice online shoppers. Escalating U.S.-China tension also makes it more complicated for American giants such as Walmart and Starbucks SBUX.O to continue their expansion in China.
McMillon's decision to focus on its own operations in China at least gives it more control over investment and growth there. It also sends a stark message about JD.com's prospects. Its stock had jumped 38% after hitting an almost six-year low in March. Deep-pocketed Walmart, though, sees more upside in cashing out now and investing the proceeds elsewhere. That makes it much harder for JD.com Chair Richard Liu to convince shareholders there's a rosier future around the corner.
CONTEXT NEWS
Walmart has sold its entire stake in Chinese e-commerce firm JD.com, according to a filing with the U.S. Securities and Exchange Commission on Aug. 20. The U.S. retailer was the largest shareholder and raised some $3.6 billion from the sale, according to IFR, or some $24.95 a share - a discount of 11.5% to the closing price of JD.com's Nasdaq-listed stock on Aug. 20.
In 2016 Walmart receiveda 5% stake in JD.com in a deal that also involved the Chinese retailer taking over Walmart’s China-focused online marketplace. In the same year, Walmart raised its holdings in JD.com to more than10%.
Graphic: JD.com is trading close to its all-time low https://reut.rs/3WMjx9C
Editing by Antony Currie and Aditya Srivastav
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
