Walmart takes $290 million non-cash impairment on Jabong
After Flipkart decided to merge its online fashion business Jabong with its other fashion business Myntra, Walmart had to take a non-cash impairment to account for the value ascribed to Jabong’s trade name, the business announced on Thursday, TNN reported. A non-cash impairment is used to reflect fair value for a prior transaction following a goodwill impairment test.
“Earlier this year, we decided to consolidate back office functions for Myntra and Jabong to drive efficiencies. In going through that process, the team decided to focus on a single premium fashion platform, Myntra.com, simplifying the business and the customer proposition,” said Walmart’s CFO Brett Briggs, reported by TNN. “Since there was value ascribed to the Jabong name at the time of the Flipkart acquisition, we are taking a non-cash impairment charge on the trade name.”
The non-can impairment, paired with Walmart’s acquisition of Flipkart last year, has impacted Walmart’s overall international operating income which decreased by 5.4% to total $4.7 billion in the third quarter of the 2020 financial year. International sales in the same time period had increased by 1.3% to $29 billion. Walmart had expected the Flipkart deal to affect its financials in this way and remains committed to growth in India, according to its CEO Doug McMillon.
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