Research Update: Walmart Outlook Revised To Negative On Flipkart Announcement, Expectation For Weaker Credit Metrics; Ratings Affirmed

Walmart Inc. announced it has signed a definitive agreement to become the largest shareholder in Flipkart Group, one of India's largest e-commerce marketplaces, in a $16 billion deal that will be funded by newly-issued debt and cash, and we expect leverage to increase about a half turn more than previously projected for the coming fiscal year. We are revising the outlook on Walmart to negative from stable given these weaker credit metric projections and heightened execution risk as the company spends heavily to expand its online and global reach while continuing its current share buyback program. We are affirming our 'AA' long-term corporate credit rating and all issue-level ratings on Walmart. The negative outlook reflects our belief that there is

...+ Walmart Inc. announced it has signed a definitive agreement to become the largest shareholder in Flipkart Group, one of India's largest e-commerce marketplaces, in a $16 billion deal that will be funded by newly-issued debt and cash, and we expect leverage to increase about a half turn more than previously projected for the coming fiscal year. + We are revising the outlook on Walmart to negative from stable given these weaker credit metric projections and heightened execution risk as the company spends heavily to expand its online and global reach while continuing its current share buyback program. We are affirming our '##' long-term corporate credit rating and all issue-level ratings on Walmart. + The negative outlook reflects our belief that there is about a one-in-three chance Walmart's strategic repositioning to compete with encroaching retail players including Amazon.com Inc. through more aggressive global deal-making and a potential financial policy shift could result in a downgrade...

Research Update