Walmart Mulls Over Sale Of E-Commerce Assets After Projecting $1 Billion Loss
In its hurried attempt to take on its online competitors, Walmart is expected to lose more than $1 billion this year due to its hemorrhaging e-commerce division.
To curb the losses it will likely incur, the retail giant is reportedly now considering selling some of its e-commerce assets.
According to a report from Vox, which was published this week, Walmart's efforts to challenge industry leaders such as Amazon have all but failed.
Apart from losing to Amazon, the company's online efforts and recent acquisitions have apparently put a strain into its bottom line. This has led to internal strife within the company, as shareholders call for new measures to overhaul its e-commerce unit.
One of the company's biggest losers in its e-commerce division is Jet, an online shopping website the company purchased in 2016 for $3.3 billion. Jet, along with other acquisitions, is expected to significantly reduce the company's forecasted 2019 revenues, which is estimated to be around $21 to $22 billion. This has placed added pressure on Walmart e-commerce CEO Marc Lore, who is reportedly now in the hot seat with the company's shareholders.
The company's chief executive Doug McMillion, along with other board members, reportedly wants Lore to cut his division's losses by selling some of its unprofitable assets.
The company's leadership is reportedly also upset that Lore had received credit for the recent online sales increase that was experienced in the last quarter.
Reports have revealed that Walmart e-commerce may be considering the sale of three particular fashion brands, which were purchased under Lore's leadership.
These brands include Bonobos, which Walmart plans to sell for around $310 million, Eloquii for $100 million, and Modcloth for around $50 million.
The fashion brands on sale are reportedly unable to realize any profits and have since been a burden to the company's earnings. For his part, Lore had previously announced that he was in favor of the company's plan to instead focus on expanding its existing fulfillment warehouses to enhance its delivery process.
Walmart currently only has around 20 warehouses for its online shop, significantly lower than Amazon's more than 100 warehouses across the United States.
In spite of its failing e-commerce assets, Walmart has made huge strides in increasing its online sales over the past couple of months. In the last quarter, Walmart was able to significantly boost its online sales, which had jumped by more than 43 percent. The overall strong first-quarter earnings report had sent the company's stock prices up to 52-week highs.