Having incurred operating losses over several years in a row, Wal-Mart is looking to cash out but still maintain a foothold in Brazil.
As per two sources with direct knowledge of the matter at hand, Wal-Mart Stores Inc is holding talks with Advent International Corp, a buyout firm, and other funds, to sell a major stake in its Brazilian operations.
According to the sources, who spoke on the condition of anonymity, Wal-Mart is being advised by Goldman Sachs & Co; they went on to add, private equity firms including Acon Investments LLC and GP Investments Ltd are also looking to invest in its Brazilian unit.
Wal-Mart’s officials in Brazil declined to comment.
GP and Advent declined to comment.
Goldman and Acon did not immediately reply to requests for comment.
Wal-Mart’s partial exit from Brazil could provide its new partners a chance to turn around its sprawling operations in the country which has struggled to turn a profit.
Going by the information provided on Wal-Mart’s local website, the world’s biggest brick-and-mortar retailer in Brazil, which operates 471 stores in the country, reported revenues of nearly $9.4 billion (30 billion reais) in 2016.
Despite these hefty revenues, Wal-Mart, has posted operating losses in Brazil for the last 7 years in a row.
As per a source with knowledge of the deal, Wal-Mart’s operating losses coincides with Brazil experiencing one of the harshest recession in decades.
Further, the retailer also plans on retaining a stake in its Brazilian unit in order to recoup costs in the event of Brazil experiencing an economic recovery or if its restructured operations boosts its results.said the source.
Incidentally retail sales in Brazil are starting to recover from the economic recession.
As per Serasa Experia, a credit data supplier, christmas sales were higher by 5.6% higher than a year ago.