Walmart is looking to divest a major stake in its Brazil unit, and is talking to buyout firm Advent International and private equity firms GP Investments and Acon Investments, according to a Reuters report citing two unnamed sources.
Walmart has built a significant business in Mexico, (pledging a $1.3 billion investment in operations there a little over a year ago) but is reportedly faltering elsewhere in Latin America, especially in Brazil.
Just last year Walmart was reportedly mulling boosting its investment in Brazil — some $320 million over three years — to invigorate sales there. Walmart didn't immediately return Retail Dive's request for more information or comment on its plans for the country.
Brazil's economy has shown new signs of life in recent months, although unemployment and inflation remain high. Walmart appears to be taking no chances.
If Walmart does downsize in Brazil, that would be in stark contrast to rival Amazon, which in October opened an expanded marketplace there for electronics. Analysts have been divided about how well Amazon will actually do in Brazil, although BTG analyst Fabio Monteiro called it a "new paradigm for Brazilian e-commerce."
The company launched Walmart Brazil in 1995, with headquarters in Sao Paolo and operations under several banners, according to the Walmart website. All in all, Walmart's international operations are immense, its second-largest operating segment, serving more than 100 million customers every week in more than 6,200 retail units, operating abroad with 55 banners in 27 countries. Third quarter net sales at Walmart International rose 4.1% to $29.5 billion, an increase of 2.5%.
The scope of Walmart's operations abroad has apparently made it a favorable training ground for executives: More than one international chief has moved on to take the reins at the overall company, including current CEO Doug McMillon and his predecessor Mike Duke. Last week the company announced that Chief Operating Officer Judith McKenna will be promoted to president and CEO of Walmart International February 1.
Unlike the rumored move in Brazil, the retail giant has plans to continue to expand in Mexico, despite the fallout from a bribery scandal there that also expanded to Brazil, among other countries. The issue is mostly resolved, as U.S. government officials and the company worked out the consequences last spring.