Walmart announced on Friday that it has agreed to sell its retail business in Argentina to Latin American group Grupo de Narváez, for an undisclosed sum.
As a result of the divestment, Walmart (WMT) expects to incur about a $1 billion after-tax, non-cash loss in the third quarter of fiscal 2021. The world’s largest retailer started operating in Argentina back in 1995, with the launch of its first shop in Avellaneda. Since then, the business has grown to more than 90 stores and 9,000 associates under the Changomas, Mi Changomas, Walmart Supercenter and Punto Mayorista banners. Walmart Supercenters will be rebranded following a transition period.
“We are very proud of our Argentina business and associates as they’ve led and shown resilience throughout this year serving customers when they needed them most,” Walmart International CEO Judith McKenna said. “We are excited by the local retail expertise the new owners bring to this already strong business, and we believe this deal creates the right structure to help it truly flourish for many years.”
Walmart will continue to support the business in the transition period and as part of sourcing agreements under the new ownership, however, it will not retain an equity stake.
Shares in Walmart have been going from strength to strength since hitting a low in March and are now trading 23% higher than at the start of the year. Looking ahead, the $150.02 average price target implies 2.9% upside potential over the coming year.
Jefferies analyst Stephanie Wissink last month reiterated a Buy rating on the stock with a $165 price target (13% upside potential), saying that the retail giant has done well in responding to the Covid-19 crisis versus peers by offering its own discounts. Wissink believes that Walmart will continue to benefit from the pandemic-led shift in buying habits with consumers shopping more online, while the retail chain also offers many delivery options, including grocery, among others.
The rest of the Street is in line with Wissink’s bullish outlook. The Strong Buy analyst consensus boasts 22 Buy ratings versus 6 Hold ratings. (See Walmart’s stock analysis on TipRanks)
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