Walmart Inc has confirmed it will sell its operations in Argentina to Grupo de Narváez, divesting a 25-year-old business to the South American group for an undisclosed sum, the companies announced Friday.
The company, which didn’t disclose the value of the transaction, said it will record a non-cash loss of about US$1 billion after tax mainly because of currency losses. It won’t retain an equity stake after the transaction.
The new ownership will bring "strong local expertise that will position the business to thrive," said a joint statement from Walmart and Grupo de Narváez, which has more than 650 stores in nine countries
The announcement means that Walmart is the latest in a series of multinationals that have decided to depart Argentina amid difficult economic conditions.
Fernando Minaudo, chief executive of Grupo de Narváez, praised the performance of Walmart Argentina during Covid-19, adding he aims to "drive long-term growth and create new opportunities for associates and suppliers across Argentina."
Walmart has 92 stores in Argentina, according to an annual report, which does not break out revenue by country. The operation has about 9,000 employees – in 2019, it was the nation's ninth-largest private employer. It also operates two other big-box chains in Argentina, Punto Mayorista and Changomas.
Walmart's international business has more than 5,800 stores in all, with Mexico, Britain and China among the most important countries in terms of retail footprint. The company has also ramped up investment in India following the 2018 acquisition of e-commerce company Flipkart.
Walmart's international business accounted for US$27.2 billion in sales in the most recent quarter, about 20 percent of total company revenues.
The sale is part of Walmart Chief Executive Officer Doug McMillon’s strategy to reshape the retailer’s portfolio of international assets. Among recent changes, Walmart sold a majority stake in its Brazil operations to Advent International in 2018 and last month found a buyer for its UK grocer Asda.
Walmart’s departure comes after Argentina President Alberto Fernandez’s government has increased currency controls and temporarily frozen prices on consumer items from food and beverages to mobile phone plans and internet service. He’s also made it illegal for companies to fire workers on payroll and doubled workers’ severance pay if firms leave, close or negotiate a resignation.
The policies complicate doing business in a country that’s on pace for its worst one-year economic decline on record, with 37 percent inflation and double-digit unemployment.
Other multinational firms, such as LatAm Airlines Group SA, Chilean retailer Falabella SA and auto paint firm Axalta Coating Systems, stopped operations in the country this year. Honda Motor Co. halted car making in Argentina in May, while Starbucks Corp. and American Airlines Group Inc. have reduced their footprint in the country too.
Grupo de Narváez already has retail operations in Argentina, Ecuador and Uruguay. The company owned the Tía Argentina supermarket chain until 1999, and it currently operates Tía Ecuador, among other grocers.