The world’s largest retailer said on Tuesday it had sold an 80% stake in its struggling Brazilian unit to private equity firm Advent International, a deal that follows its recent $16 billion purchase of a majority stake in Indian online leader Flipkart and the sale of its British chain Asda to rival Sainsbury’s. The deep recession in Brazil, where Walmart has 438 stores (down from 558 only five years ago) and some 55,000 workers, has dented its financial performance there for years, and the company is clearly focusing on higher growth markets like India and China.
“The decision to partner with Advent in Brazil results from a thoughtful and deliberate review of Walmart’s international portfolio,” Walmart said in a statement, adding that it Walmart expects to record a non-cash net loss of approximately $4.5 billion as a one-time item in the current quarter. Walmart will keep the remaining 20% of the business.
The Brazil transaction is the third major international deal in as many months under the new CEO of Walmart International Judith McKenna, ranked 28th on Fortune’s Most Powerful Women in business list. And, the move won praise from analysts. Moody’s Lead Retail Analyst Charlie O’Shea said in a note that the deal represented “a continuation of its long-standing strategy of redeploying assets, both financial and personnel, to concepts and places that have more long term potential.”
McKenna, who until January had been the highly regarded operations chief of Walmart U.S., was tasked with reigniting growth in Walmart’s underperforming international business. That unit, while overshadowed by the enormous U.S. business, generates nearly 25% of Walmart Inc’s $500 billion in revenue. Last year, revenue inched up 1.7% in the international unit after two years of large drops. But, according to Reuters, Walmart saw operating losses in Brazil for seven straight years.