Walmart India is in the process of letting go of 56 senior executives including vice presidents across sourcing, agri-business and the fast-moving consumer goods (FMCG) divisions. According to sources, the layoffs announcement came at the company’s town hall meeting on Friday (January 10).
“Walmart remains committed to growing its B2B cash & carry business in India. We opened 6 new Best Price modern wholesale stores, 1 fulfilment centre and our sales grew 22% in 2019,” said Krish Iyer, President and CEO, Walmart India in a statement.
He also added that the company is looking for ways to operate more efficiently, which requires them to review the corporate structure.
“As part of this review, we have let go 56 of our associates across levels at the corporate office. All of the 56 impacted associates (8 in the senior management and 48 in the middle/ lower management) have been offered enhanced severance benefits and outplacement services to support their transition, ” Iyer added.
Walmart was also reported by ET to be planning more layoffs is expected by April, but the company denied these report calling it baseless and incorrect. The report also said the company plans to shut its Mumbai fulfilment centre.
Layoffs To Tackle Losses?
Walmart India registered a net loss of INR 172 Cr year-on-year (YoY) for the financial year 2019, which has almost doubled since the previous year. The retail giant had said during that time that the increased losses were mainly due to the company’s investment in India for long-term benefits.
The company claimed that it has been revamping its technology infrastructure to enhance its capabilities in both online and offline marketplaces, along with working on developing its workforce. Walmart had also set up two fulfilment centres in Lucknow and Hyderabad in 2018-19.
Walmart entered India in 2009 and made the world’s biggest ecommerce acquisition in the form of Flipkart in May 2018 by acquiring a majority 77% stake for $16 Bn. Later in November 2018, Walmart increased its stake to 81.3% by buying partial or full stakes from Flipkart’s previous investors.
Walmart International had earlier said that it remained hopeful of the Indian market. “Beyond just our current results, the Indian market represents a significant opportunity for growth, and our team of innovators brings local expertise to a market where understanding the flow of everyday life can help us provide products and services that remove friction from the lives of our customers,” said Doug McMillon, president and CEO of Walmart, during the third quarter fiscal year 2020 earnings event.
Though the company has been reiterating that it has no plans to exit the wholesale segment in India, the layoffs indicate the company may end up selling off some part of its brick-and-mortar cash-and-carry business or consolidating its operations.
Update 1: January 13, 2020 | 16:30
- Walmart India sent a statement with the exact number of layoffs. The story has been updated with this information.
- The headline of this article has been changed to reflect new facts.