U.S based and world largest retailer Walmart Inc. (WMT) has concluded to sell off its operations in Argentina which is currently going through an economic recession catalyzed by the coronavirus pandemic.
Walmart said it will incur a $1 billion after-tax, non-cash loss resulting from this sale. The retailer will be selling these operations to Grupo de Narváez– a South America based supermarket chain owner.
Walmart did not reveal the size of the deal for the retail operations which involves more than 90 stores however, the company said the deal will be finalized during the third fiscal quarter of 2021.
Argentina has been grappling with a recession since 2018, the country has just come out of sovereign default additionally it’s also starring at a currency crisis. International investors have been opting out of the country due to the economic turmoil however the government has been downplaying such opinions.
“In Argentina you see a phenomenon of firms divesting, and companies changing hands, reflecting a lack of confidence in the direction of the country. Argentina lacks clear rules of the game,” said Guido Lorenzo, economist at consultancy LCG.
Lorenzo greatly believes a huge uncertainty over policies still exists in Argentina.
The government has been strongly denying the narrative that foreign entities are ditching the country due to its current economic problems. The government maintains that it’s on course to revive the economy and attracting more international investors.
“Although the global and local scenario is complex, and despite the myth of an exodus, the truth is there are firms continuing to bet on the country and announce investments every week,” said the Ministry of Development.