Walmart Just Took a Big Step Away from the Grocery Business
Walmart has agreed to sell its U.K. grocery chain, Asda, to local competitor Sainsbury’s, signaling a shift in the company’s international strategy.
Sainsbury’s, a British grocery chain, will buy Asda for £3 billion ($4.1 billion) in cash and a 42% stake in the company, which will make Walmart the largest minority shareholder. Walmart is rejiggering its position elsewhere as well. It is scaling down its holdings in Brazil as it takes a new tack in India, attempting to gain a majority position in the online retailer Flipkart.
The shift comes three months after Walmart appointed Judith McKenna as the new head of its international business and seems to be an attempt to revamp the under-performing unit. Although more than half of the company’s stores are outside the U.S., the international business brings in only about a third of revenue. In the U.K. and Brazil, where it is downsizing to the tune of hundreds of locations, the company has struggled for years. Meanwhile, the potential deal with Flipkart would give Walmart the foothold in India it has been seeking.
The U.K. merger will make Sainsbury’s Britain’s largest retailer by market share, surpassing current leader Tesco. Sainsbury’s and Asda are currently the country’s second- and third-largest grocery stores, respectively.