Walmart, the world’s largest retailer, said on Friday it was selling its retail operations in Argentina to South American supermarket chain owner Grupo de Narváez, pulling back as the country grapples with an economic crisis.
Walmart did not disclose the size of the deal for retail operations involving more than 90 stores, but said it would record about a $1 billion after-tax, non-cash loss related to the divestiture in its fiscal third quarter next year.
The sale comes as Argentina, mired in recession since 2018, has just emerged from a sovereign default and is grappling with a currency crisis. The government has been fending off talk that international firms are looking for the exit.
“In Argentina you see a phenomenon of firms divesting, and companies changing hands, reflecting a lack of confidence in the direction of the country,” said Guido Lorenzo, economist at consultancy LCG, adding there was huge uncertainty over policy.
“Argentina lacks clear rules of the game.”
Walmart sold the majority of its unit in Brazil in 2018, though it maintains major operations in Chile and Mexico. The exit from its business in Argentina, where it began operating in 1995 and currently has some 9,000 employees in 92 stores, would include its popular Changomas and Punto Mayorista chains.
Argentina is headed for an economic decline of nearly 12 percent this year, exacerbated by the coronavirus pandemic.
The country has imposed capital controls as it battles a currency crisis, and recently restructured over $100 billion of foreign currency debt with local and international creditors.
The economic malaise and uncertainty have hit corporations in the country and led to others pulling back, including LATAM Airlines Group and department store owner Falabella.
The government has sought to downplay the narrative that international firms are ditching the country over what critics have described as anti-investment policies.
“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,” the ministry of development said in a report this month.
Following the acquisition, family-owned Grupo de Narváez will own 656 stores, including supermarkets, and apparel and home appliance outlets in nine countries, including Ecuador and Uruguay, and employ more than 24,500 workers.