Welcome to the Walmart Investor Call and Q&A. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. I'd now like to turn the conference over to Steve Schmitt, Head of Investor Relations. Please go ahead.
Thank you for joining us today to discuss our investment in Flipkart Group. On the call is Doug McMillon, Walmart's President and CEO. Doug is joining the call from India, so please bear with us if there's a slight delay in the audio. Also on the call is Judith McKenna, President and CEO of Walmart International, and Brett Biggs, Walmart's EVP and CFO. Before I turn the call over to Doug, let me remind you that we'll be making forward-looking statements. You can find our safe harbor for these statements in the investor presentation accompanying this call on our website. Walmart will release its first quarter earnings next Thursday, May 17th. With this in mind, we will not be discussing our first quarter results today. We're hosting this call to discuss and answer your questions related to our announcement to invest in a majority stake in Flipkart.
We've also put out a presentation with the release this morning to discuss the strategic rationale. Given various schedules around the world, we're going to keep this call to a maximum of 45 minutes, so I apologize in advance if we're not able to get to everyone's question. The investor relations team will be available for follow-up calls. With that, I'll turn the call over to Doug.
Thanks, Steve Schmitt, and hello, everyone. As a company and around the world, we're taking steps to strengthen our service to customers with increased value, a broader assortment, and improved experience, while at the same time, we're taking action to position the company for the future. In other words, we are actively working to shape the portfolio of geographies and businesses we're in order to set the company up for success for another generation. If you've been following us closely, in addition to the investments we've been making, you will have noticed decisions to sell or exit parts of our businesses around the world these past few years. There are examples in the U.S., Mexico, Japan, Chile, and Brazil, where we've exited store formats, banks, restaurants, and an e-commerce business. Most recently, we shared the intention to merge our Asda business with Sainsbury's.
Doing so will help position Asda for long-term success, benefiting our customers and colleagues in the U.K., as well as shareholders. Today, we're excited to announce our investment in Flipkart Group. India is one of the largest and fastest-growing economies in the world and represents an enormous market opportunity with 1.3 billion people, strong GDP growth, and a growing middle class. We've been operating in India since 2009, and we're very encouraged by the progress we're seeing. One of the things we're most excited about is e-commerce in India, which we expect to grow at 4 times the rate of overall retail. Flipkart is already capturing a large portion of this growth and is well-positioned to accelerate into the future. Founded in 2007, Flipkart has led a transformation in India's e-commerce market. They're a homegrown winner with a strong team.
Over the last few months, we've gotten to know the leadership team. We're confident that they are building a business that will scale and last. We found them to be committed, passionate, and creative. Their ability to identify and solve problems resulting in an improved customer experience is impressive. We see alignment between Walmart and Flipkart as it relates to our purpose and values. Most importantly, we have a shared commitment to serving customers. We're also pleased to partner with Tencent, Tiger Global, and Microsoft, which will be key strategic and technology partners as we make this investment. The new Flipkart board will partially change in composition to reflect our new structure and be an important ingredient in the future success of this company. This will be a team effort, strengthening existing and building strategic and competitive advantages for the company.
As it stands today, the company is generating losses to accelerate their growth. We understand the dilution impacts our shareholders and have given that significant thought as we contemplated this investment. We understand both the short-term and long-term expectations of our shareholders. As we weigh those expectations, we believe this transaction is very important to our company for the future. Here's why. Flipkart is large and growing. In the fiscal year ending March 31st, Flipkart had annual GMV of $7.5 billion, representing more than 50% year-over-year growth. Flipkart's number of active customers has also grown 7 times since 2014, coming in at approximately 54 million last year. It's also important to understand that Flipkart has built and is building a powerful ecosystem. It's comprised of the following segments.
Flipkart, the core general merchandise platform, has leadership positions in some of the most attractive categories in the Indian retail market, including apparel, mobile, electronics, and large appliances. Myntra and Jabong.com come together to form a fast-growing fashion e-commerce platform. This is an important category to win, a positive when it comes to margin mix, and we believe this piece of the company is positioned well within India's growing middle class and relatively young population. The PhonePe payments business supports the growth and development of e-commerce, delivering innovation to merchants and customers to simplify transactions. This is an important piece of the puzzle when building an ecosystem, helping to deepen customer relationships through more frequent interactions and personalization based on insights into customer needs and wants. Plus, Flipkart's supply chain arm, Ekart, serves more than 800 cities, making 500,000 deliveries daily.
At Walmart, we're learning how to build and how to partner to build retail ecosystems around the world. India will now become a key center of learning for our entire company. With this investment, we're pleased to be making a long-term commitment to India's future. We believe we can be a force for good in the country as we work to deliver shared value. As we look to the future, we believe this investment will contribute to sustained economic growth, especially across India's agriculture, food, and retail sectors. Jobs will be created through development of supply chains, commercial opportunity, and direct employment. We'll continue to invest in local communities, partnering with Kirana owners and members to help modernize their retail practices, supporting farms through local sourcing and greater market access, and reducing food waste by improving waste management practices and investing in supply chains.
Walmart is transforming globally to not only meet the needs of customers, but to exceed and delight them. New opportunities emerge every day, and we're moving quickly to stay out in front of change. We're harnessing technology, investing in people, and thinking differently about how to serve customers. India is a priority market for us. The investment will help us continue to serve our members in India, gain new customers, and create more opportunity for our associates. Now I'll turn the call over to Brett to review the financial implications of this investment.
All right. Thanks, Doug. Good morning, everybody. As Doug mentioned, we believe our investment in Flipkart Group will position us to realize tremendous growth opportunities in India. Over the next five years, India's retail market is expected to reach approximately $1.3 trillion, and we believe that India will be a top five e-commerce market within the next five years. Flipkart has seen rapid growth over the past several years, and we expect this trend to continue. In the latest fiscal year, Flipkart had GMV of $7.5 billion and $4.6 billion in net sales, representing more than 50% growth in both cases. As you likely saw in our press release this morning, Walmart will invest approximately $16 billion for an initial stake of approximately 77% in the Flipkart Group. This investment includes $2 billion of new equity funding, which will help Flipkart accelerate growth in the future.
We're in discussions with additional potential investors who may join the round, which could result in our stake moving lower, but we would continue to retain clear majority ownership. The remainder of the business will be held by Flipkart's existing shareholders, including Flipkart's co-founder, Binny Bansal, Tencent, Tiger Global, and Microsoft. Walmart will finance the transaction with a combination of newly issued debt and cash on hand. Upon closing, Flipkart's financials will be reported as part of Walmart International's business segment. From an EPS perspective, if the transaction were to close at the end of Q2 FY 2019, we expect a negative impact to fiscal 2019 EPS of approximately $0.25-$0.30, which includes incremental interest expense related to this investment.
In FY 2020, as we look to accelerate growth in this important market, we anticipate an EPS headwind in total of around $0.60 per share, comprised of operating losses of approximately $0.40-$0.45 per share. That assumes minimal tax benefit for those losses in the near to midterm. This amount also includes about $0.05 per share related to amortization of intangible assets and depreciation of short-lived assets resulting from purchase accounting, which will only last for a few years post-closing. It also includes interest expense of approximately $0.15 per share. In the mid to long term, as the business scales and efficiencies are realized, we expect losses to decline and returns to improve. Given Walmart's financial strength, we anticipate the continuation of our current share buyback program while maintaining our strong credit profile.
This investment represents a unique opportunity in a market with significant long-term growth prospects. We're investing in a local leader with strong leadership and a culture of innovation and service. Walmart is aligned with a strategic and committed shareholder group focused on serving customers. With that, Doug, Judith, and I would be happy to take your questions.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question today, please press *1 from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press *2 if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we assemble the queue. Thank you. Our first question comes from the line of Karen Short with Barclays. Please proceed with your question.
Hey, thanks very much. Just a quick question in terms of the operating losses. We can all back into what that implies on a monthly basis in terms of operating losses, wondering if you could just talk to the cadence a little bit in terms of how those losses have cycled from last year into this year. Then maybe talk a little bit about some of the ways you plan to stem the losses in the path to greater profits, I guess?
Hey, Karen, I'll start. This is Brett Biggs. Thanks for joining. The losses that they've had up to this point, we're not going to get into much of the historical financials of the company. What we'll look at is going forward. As you said, when you look at our numbers, you can back in pretty closely to where we think the losses will be. As you can imagine, we're going to have to get into the business more, assess what we think we can do with the business. We've done a lot of that, obviously, before we've signed. Continue to learn in the market and continue to give you as good of visibility as we can going forward. As you know, we typically this time of year wouldn't even give any guidance toward next year. We've tried to do that because of this being a unique situation.
We'll continue to update that along with our company guidance as we go forward.
Okay, thanks.
I think you're going to talk about the business.
Okay.
Just in terms of the business model, one of the reasons we put the $2 billion of primary in as well is to allow the business to continue to grow for the future. That's really important in this market. We believe there are synergies that we will bring, which over the mid to longer term, mean that we'll see improvements in the operating model from them. We're confident that they've got the right strategy and they're doing the right things, and this is really important to us that the Flipkart team can continue to operate in the way that they have and make sure that the business is successful.
Karen, were you trying to ask a follow-up? Go ahead if you'd like to, please.
Sorry. I just wanted to ask, there's been a lot of commentary in the press about the potential for an IPO down the road as well. I just was wondering if you could comment on that and if that's something that you think is viable and what timeline that might be.
We're not giving a timeline to that. We're just saying that we're supportive of management who would like to see that happen in the future. There's no timeline associated with that at all.
Thanks, Karen. Robert, next question please.
The next question is coming from the line of Matt Fassler with Goldman Sachs.
Thanks a lot. My primary question relates to infrastructure. Can you talk about the company's current distribution infrastructure and the kind of investments that you'd need to make to scale it?
Yeah. They currently have quite a lot of investment already in the infrastructure, and it's one of the things that's great about that business is it has a logistics arm to it, and it's building it out. We think that one of the ways that we can help support the business is with our expertise in supply chain and e-commerce supply chains as well as retail supply chains. That's one of the areas we're looking at. We took into account as we looked at this business that there will need to be some investment in that area, but we're comfortable that we've got the right level of investment in there.
By way of quick follow-up, globally, you're a big player almost everywhere you do business in food. Flipkart doesn't seem to have a big presence in food and consumables. Can you talk about your plans for potentially changing that in the future, or do you expect the lines of business to be consistent with where they are currently?
The Flipkart team would say that they believe there is good opportunity within food in India, and you heard Doug talk about the opportunities for agriculture, for food within the whole Indian economy. It is one of those areas that we're growing an expertise in. We're excited about how we can help develop in the future.
Thanks, Matt. Robert, next question please.
Next question comes from the line of Oliver Chen with Cowen and Company.
Hi, thank you. Our question was about the framework around this and thinking about the majority investment versus the partnership and how you approached the priorities there. As you spoke to the retail ecosystem, what are your thoughts on those synergies and what best practices may be applicable to as you think about U.S. Walmart and your overall bricks and clicks and physical plus digital thoughts? Thank you.
Yeah. Maybe, Judy, I'll comment first on the ecosystem. I think China has been quite informative. If you look at how that market has developed and understand the relationship between e-commerce and payment marketplace, e-commerce and payment, then look at what this platform represents in India, we pick up a payment business, a margin business in apparel that's helpful, an e-commerce business and last mile. It really was a unique opportunity to put all those pieces together, and over time, we think they'll be complementary. In the short term, we're racing to build scale, we won't necessarily lean into leverage. I think right now speed trumps leverage.
Yeah. Doug, just to respond to the point about why it's 77% and how did that come about. One of the things that was important to us here was to have some partners alongside us as well. Having Tencent, Microsoft, and Tiger Global who are already invested in this business is really powerful in terms of the model that we're creating. Look, we will run through an independent board who will have some Walmart representation on there. We think that that structure best will keep the entrepreneurial spirit of this business and help guide it strategically as well.
Oliver, as we mentioned, we still are having discussions potentially with other investors that might come in on the round, which would be great. We'll continue to have control, but if we're at 77%, we're happy with that as well. Thanks, Oliver. Robert, next question please.
Next question is from the line of Peter Benedict with Robert W. Baird.
Hey, guys. Kind of a follow-up to that. Just on the potential for additional partners to join. From a timeline perspective, is that decided upon at closing? Should we expect, or could there be news on that prior to closing? Just kind of curious how that could theoretically play out.
Yeah. We said we're in discussions with a number of people. We'll see how that plays out, and we'll let you know if there's any kind of updates on that.
Thanks. Robert, next question please.
Next question is from the line of Michael Lasser with UBS.
Good morning. Thanks a lot for taking my question. Can you just offer some perspective on your philosophy about absorbing operating losses from this business kind of beyond the next two years and how you think about the governance structure and its influence on the business between generating growth and building for the future and managing more intermediate term profitability?
Yeah, Michael, this is Brett. I'll take the question. As you can imagine, what you just described is a lot of things that we've been discussing as a management team. We've said that before, that these are the kind of things that we've been discussing. As we went through this process, we're certainly thinking about how to set this business up 10, 20, 30 years from now to be incredibly successful, but also understanding short-term expectations from shareholders. We have expectations of ourselves as well. It's really that balance, and that was a big part of these discussions. We realized from an investor standpoint in the short to mid-term that the dilution is not insignificant.
When we balance that out with an opportunity to really be a player with an innovative company with 1.3 billion people, we felt like this was the right investment at the right time for Walmart.
Thanks, Michael. Robert, next question, please.
The next question is from the line of Christopher Horvers with JPMorgan.
Thanks. Good morning, guys. I had more of a big picture question. As you think about deploying $16 billion in capital, how did you weigh that versus deploying that in the U.S.? Does it limit your ability to do more in the U.S.? We saw yesterday that the Uber delivery relationship was ended, according to the press reports. Why not use that capital in the U.S. to shore up same-day delivery? Or do you think the U.S. platform is where it needs to be from a last mile perspective? You generate $20 billion in free cash a year, this would seem to limit another sizable capital deployment in the near term.
Chris, this is Doug. I would say that the plans that we have in place reflect ongoing investment in the United States, it's not our intention to let the business suffer as a result of investments made elsewhere. We are being choiceful about resources. I think the announcement in the U.K. is representative of that. We've gone through, and basically continually go through, a process of prioritization to make sure that our investments are balanced relative to where we see opportunity, both sales and profit-wise, over the mid to long term.
Robert, next question, please.
The next question comes from the line of Robbie Ohmes with Bank of America Merrill Lynch.
Oh, hey, guys. Another kind of big picture question for you, Doug. Maybe a little more background, a little more on why do this right now. I think Amazon has shown much stronger market share gains the last couple of years, more recently in India, and Flipkart's market share gains have been slowing. Does Walmart have a strategy to help Flipkart re-accelerate market share gains in India? Does Flipkart bring anything to Walmart's U.S. business or other international businesses?
Yeah, Robbie, we like Flipkart's plan and the results that we've seen in the business over the last couple of quarters in particular. I think it should be emphasized that this is more than just a marketplace business in e-commerce. Again, the logistics capability, the payment capability makes this one unique. We feel like that we're going to be able to learn about how pieces of an ecosystem work individually and collectively and take that learning to other parts of the world. There is a strong tech team here, and I've really enjoyed the interaction we've had over the last few months, including being here this week and getting to meet them and hear about some of the innovative things that they are doing across the business in the apparel area, as well as in payment and in e-commerce.
I do believe that we're going to get learning out of Flipkart that'll help the rest of the business. It may also be worth mentioning that for a long time now, we've had tech resources in India. We have a sourcing operation here, so we're really familiar with the country in addition to the cash and carry business that we operate. We have seen some great talent. I expect that we'll see people come out of India to help lead parts of our business, as well as tech innovation.
Thanks, Robbie. Robert, next question, please.
Next question comes from the line of Scott Mushkin with Wolfe Research.
Hey, guys. Thanks for taking my question. I had a question and a clarification. In the press release, it talked about, I guess I'll get to the point. Are you guys going to maintain your credit ratings when you do this, or are they going to fall? I actually have a question, so a clarification and a question.
Yeah. Scott, this is Brett. As you can imagine, we've discussed this with our rating agencies. I'm sure they'll be issuing reports at some point. As we've said, our strong credit rating is important, and we believe with this, because of what we've done over the last couple of years from a working capital perspective, we started bending the cost curve in the business. We've set ourselves up financially really nicely to do this transaction and believe our credit profile will remain very strong.
Okay. My question, we kind of hit on it a little bit. Obviously, you guys have done a remarkable job with the U.S. business. At least it's obvious to us. Also, I think if we take a step back, the investments made overseas have generally been a little bit more difficult. We also see the e-commerce has been losing money for a lot longer. We keep waiting for that turn, but it really hasn't happened yet. I guess, we look at the numbers, $28 billion in EBIT in FY 2014. Looks like it's going to be somewhere like $21 billion in FY 2020.
I guess I'm just trying to understand why not deploy capital into your core business in the U.S. or North America, because obviously Canada and Mexico do really well, too. I'm just trying to understand the philosophy a little bit better because the track record and the core competitive advantages you guys have are really in these Supercenters in North America or stores in North America. Maybe some comments on that. That'd be great.
I'll go first. You guys can chime in if you want to. I think if you look at the international business, it's important to remember it's not one business really. Evaluate Walmex and Canada, Brazil independently as you do that. As it relates to the U.S., it's obviously very important that we win there. If we were looking at this company with, say, a 3- to 5-year horizon, we would invest in the U.S. and protect the core and maybe consider not doing other things. As I mentioned a few minutes ago, we've got a plan that relates to the U.S. investment. We're comfortable that we can execute that plan and have a bit of a longer-term point of view beyond 3 to 5 years as it relates to setting the company up for growth and profits in the future.
When you step back and look at the world, look at all of the countries, their size, their growth rate, their potential, there just aren't opportunities like the one that we're looking at. India as a country, the growth rate in GDP, the size of the market, the growth of middle income, the opportunity that still exists for the adoption of technology and mobile. Then click down to what space would you want to be in. We're retailers, and if you're going to look at the retail space in India, the e-commerce marketplace is the place you'd want to be. The fact that it's got this fashion business, payment business, logistics business is just an added plus.
If you're thinking 10 years or beyond, you check the box on the country, you check the box on the positioning of the businesses, and you check the box on the management team, beyond just one person, but a group of people. I think it leads you to a conclusion that this is the right decision to make and to do this now, and we're excited about it. I think you can continue to expect us to have success in the U.S. at the same time.
Yeah, Doug, I'd just add to that, which is we continue to be thoughtful about the choices we make around the portfolio and the Asda Sainsbury's decision that we announced last week is a really good example of that, about how we're finding unique solutions around the world to make sure that the capital choices that we make are the right ones overall.
Thanks, Scott. Robert, next question, please.
Next question is from the line of Simeon Gutman with Morgan Stanley.
Thanks. Good morning. Just a couple of questions. I'll put them into one. First, I think there was an earlier question on infrastructure. Curious if having stores one day and Walmart being able to open stores one day is any part of the consideration. The second question is, as you've evaluated this decision with the board and amongst yourselves, I wanted to ask about the hesitations you may have had from an operating perspective. Not about the losses, which you said was a tough decision, but just what are the considerations why this business may or may not scale if the market doesn't scale, if the competitive set. Just curious what some of those issues may have been.
Maybe I'll take the last part first. I think we are excited about this management team. When I think about risks, the first one that comes to mind is we've got to balance the requirement that we will have as it relates to compliance, ethics, accounting standards and controls, all the things that as a company we've been doing for a long time in lots of markets and understand that this is a business that's still relatively young and has been focused on customers. Inevitably, there are going to be some improvements that we want to make there, I'm sure, as we get into the business. Doing that at the same time that you enable the freedom to move with speed, innovate, serve customers, is this tricky balance.
I've been so encouraged by and impressed by what I've learned from this Flipkart team over the last few months as it relates to problem-solving. They identify customer problems, other challenges in the business, and they innovate, and they do it quickly. Part of what we're doing is investing in a country and a position, certainly management team, leadership team, but we're also investing in a set of creative problem solvers. It's not just what they've done before, but what they will do that causes us to be so optimistic about the opportunity. Thanks, Simeon. Robert, next question, please.
Next question is from Ben Bienvenu with Stephens.
Hey, guys. Thanks. It's actually Daniel Imbro on for Ben. Thanks for taking our questions. First a clarifier, then a question. To clarify, you noted the dilution of the transaction will increase in FY 2020. Is that just annualizing the FY 2019 impact, or are there more significant incremental investments that you guys will need to make to support this growth?
Hey, Daniel, this is Brett Biggs. For the most part, it's the annualization of it. What you see in FY 2019, again, we don't know when the transaction will close, but if it were for a half year, that's a half-year number. We do anticipate allowing this company to continue to accelerate its growth, and we'll be supportive of that.
Thanks, Daniel. Robert, next question, please.
Next question comes from the line of Scot Ciccarelli with RBC.
Good morning, guys. In today's press release, you commented that over the long term, you expect losses to decline, which frankly isn't the same as transitioning to profits. I guess the question is: Is there a general rule we should be using for either how big you think this business needs to be to hit breakeven or maybe how far into the future till the business hits breakeven?
This is Brad. I appreciate the question. As we've been in India for a while, we know the market well. We want to make sure that we allow this business to do everything that it needs to do to grow. The good thing about our business is we're global. There's a lot of different levers that we have to pull in how we balance this out as a company. We want to allow this as another part to our business to do what it needs to grow as we go through time. As we go through time as a company, we'll be coming back and talking to you about what our expectations are, and right now going out to next year is what we feel comfortable talking about at this time.
Thanks, Brad. Robert, next question, please.
Next question is from the line of Edward Yruma with KeyBanc.
Hey, good morning, guys. Just two quick ones. First, on the $2 billion that's part of the recap here, is that to accelerate growth or is that to kind of offset maybe cash losses in the business? Secondly, how important is the physical retail strategy for the market going forward? Thanks.
Yeah, on the $2 billion, again, we want to give them every opportunity to do what they want to do to grow the business. It really is to allow them to continue to accelerate what they're doing.
Sorry, Judith, go ahead.
No, sorry, Doug. This is to say from a retail strategy perspective, clearly, we already have an Indian business there with 21 cash and carry stores. They've returned to growth recently, opening five stores this year. We definitely see in the future down the line that we can use omni-channel experience, to see how that we can continue to grow and find innovative ways to serve customers.
Robert, next question, please.
The next question is from the line of Robert Drbul with Guggenheim Securities.
Hi, guys. Good morning. I just have two questions. The first one is, when you look at the e-commerce penetration as a percentage of total retail in India, the last couple of years, 1.8%, 1.8%, this year 2.1%, projected to go to 6% over the next five years. Why are you convinced that that's going to triple in terms of penetration over the next five years? What's going to change between now and what's happened in the next five years in terms of that penetration rate? The second question that I have is, can you just talk to the competitiveness for talent in that market and your ability to retain the talent within the Flipkart organization?
I'll just talk about the growth there and what that looks like. What you've also got to remember is the absolute numbers in India in terms of the total population is really significant. Those percentages are a lot of customers on the platforms that we're talking about. In terms of the growth, the information is that we've got a CAGR in retail of about 9% over the last 10 years. E-commerce is forecast to grow at four times that rate. You've got a population where it's becoming increasingly mobile, where you've got internet penetration across the country increasing as well. It's going to be at around about 60% by 2020. It's about 30% today. All of the indicators are there that this will be a market that will accelerate very fast from an e-commerce perspective.
Interestingly as well, if you look around the world, if you take a market like China and you think about that six years ago in China, that was a cash on delivery market. I don't think anybody would have predicted then as to what it looks like today to be one of the most sophisticated payments markets in the world. We're really excited about what that level of growth looks like and what that will give us. From a team perspective, in terms of retention, it is clearly a competitive market in India, Flipkart's already proved itself that it's got a great tech team, and Doug's just talked about that and some of the talent that's there. We're excited not only about Binny Bansal, who is going to continue to lead as Group CEO, but the business unit leaders as well.
They have a real depth of talent across the business. As you'd expect, we're putting the appropriate retention into place to make sure that people know how excited we are about them continuing in the new business.
Thanks, Judith.
Also, an exciting dimension as it relates to the IPO that we've spoken about in the future. I think the other thing that's key is giving them freedom to continue to innovate and lead. If we over manage this thing, that'd be the best way to chase off talent, and we're going to be careful not to do that.
Thanks, Doug. Robert, next question, please.
Next question is from the line of Edward Kelly with Wells Fargo.
Hi, good morning, guys. Just two questions for you. First, can you take a step back maybe and help us think about the cash flow profile of Walmart right now? You've made significant investments in the U.S. business since 2014, but your free cash flow hasn't skipped a beat. If anything, it got better. Now you're selling Asda, which is generating cash, buying Flipkart, it's dilutive. I don't want to sound short-sighted because I know you're not going to run your business like that. How should we think about the free cash flow profile over the next few years, and are there offsets? The second question I have for you, is there any change in how you're thinking about investment in the U.S. business? Your appetite for near-term losses for a longer-term benefit from the outside looking in seems to be growing.
Does the U.S. business also need more investment? Thank you.
Yeah, you bet. This is Brett. I'll start off. From a cash flow perspective, you pointed out our cash flow has actually gotten better. If you look at the last two years and combine the last two years, we've generated almost $60 billion of operating cash flow. CapEx has actually come down a little bit. As we're building fewer stores, we're investing our CapEx differently, but it's come down actually a little bit significantly over the last three or four years. As we go forward, we're going to balance. Again, we've got a lot of different things that we can do, a lot of different ways for us to balance what we want to do long-term with short-term and mid-term expectations. That, as a management team, that's what we spend a lot of time on, is making those decisions.
From an investor standpoint, what I believe you should be encouraged by is that we are making decisions. There's times today where we're going to make a big investment. There's times where we're saying we're going to invest differently, or we're going to get out of a situation. I think you've seen us do both of those, we're trying to take a balanced approach as we go into the future. Doug, I don't know if you want to talk about the U.S. business, your thoughts there.
Yeah, sure. I think the U.S. plan continues to include some level of price investments, which we manage very closely. You know that we made some additional changes to wages that we shared a few months ago. We'll continue to see that through. No new news as it relates to that. As it relates to U.S. e-commerce, if you look back over the last few years, we've been telling you, "Hey, we've got to get our fulfillment centers open," which we've done. We've got to get our e-commerce tech platform in place, which we've done. Continues to be enhanced, but it's there. I'm excited about the web design reset that we did just recently.
The other things that have to be done that are not behind us are we've got to have the assortment that customers are looking for, and we've got to be able to deliver it on time when they expect it. We still have room to improve as it relates to those two dimensions. Marc, in the past, has talked to you about our customer value index. Have it and deliver are the two areas that we're focused on in particular. We still have an appetite for acquisitions that make sense, that help us accelerate on the assortment side, which not only drives the top line but also helps us with margin as we work our way towards profitability in U.S. e-commerce.
Thanks, Ed. Robert, next question, please.
The next question is from the line of Charles Grom with Gordon Haskett.
Hey, good morning. First, congrats on the transaction. I'm sure a lot went into it. When you think about the benefits from the deal, I'm curious what you think Flipkart can actually bring back to your U.S. business, similar to when you acquired Jet with Marc. Are there any intellectual capital opportunities, category opportunities for the company? Then second, when you think about the deal, how will the Flipkart team work with Marc and the U.S. team? Are they going to be separate? Will they be working together? Thank you.
Hi, this is Judith. If you think about the benefits from the deal, I think we've outlined what are some of the key things around this business that particularly interested us. Not only is it the innovative problem-solving culture that they have, but they're doing some great work both in the artificial intelligence space, how they're using data across their platforms, but particularly in terms of the payment platform that they've created through the business called PhonePe. I think all of those things we can learn from, for the future, and see how that we can leverage those around the international markets and potentially into the U.S. as well. The business will be run as part of the international segment, but actually, it's an independent part of that run through a really important board structure.
Marc and the team will help provide advice to that, and equally, the team, I'm sure, will spend some time with them over the future. It's very much a separate business, and we want it to retain that way to keep that spirit of entrepreneurialship very clear. Just as we did, and Doug was very clear about when we did the Jet acquisition as well.
I would just add that Marc has been helpful to Judith, Brett, and I, and the rest of the team as it relates to understanding the Flipkart business, digging deep into it. He made a trip to India with Judith and I a while back. He spent time with the Flipkart team in the U.S. and is supportive of the transaction. We, Marc and I, and the rest of the team are very clear that we want Marc focused on the U.S. with the vast majority of his time. Maybe someday we might involve him in more, but right now there's plenty to do in the U.S., and that's what he's focused on.
Thanks, Charles. Robert, next question, please.
Next question. It comes from the line of Greg Melich with MoffettNathanson.
Hi, thanks. I wanted to follow up on something on the first paragraph of the press release, which was talking about the second, that majority ownership would be key. Also the ambition of being publicly traded or being a listed firm in India. Why is that important? Is it there to help keep the talent and to get it on board? Is Walmex a good example there, and does that mean that Flipkart ultimately could be a brand taken outside of India?
Hi, Greg. It's Judith. Yeah, I think you're thinking about that in the right way, which is that not only is that something that the management team there that would be very interested in doing. We also have one of our models of operating around the world is clearly Walmex, and that's proved to be an incredibly successful business for us. It aligns with the management team's ambitions. It aligns with an operating model that we are used to and comfortable with working with. There's no timeframe on that, but I think it is something that for the future we are considering.
Greg, I think if you look at the last week now, it's a good example of how we are thinking about partnerships differently, and we're willing to look at different structures around the world.
Thanks, Greg. Robert, next question, please.
Next question is from the line of Joseph Feldman with Telsey Advisory Group.
Yeah, hi. Good morning, guys, congratulations on the deal. A lot of my questions have been answered, I wanted more of a detailed question. Can you talk a little bit about just kind of the financing of the deal and the mix of debt versus cash that you're planning to use? I know you've talked about still maintaining the buyback program. Can we discuss maybe the flow of that and how that might look this year versus what we all probably thought it would have looked like?
Yeah. Joe, I'll take that. As you think about where we've been over the last couple of years, our credit metrics are better today than they were two years ago. That's given us stability, and this is a good time for us to do a transaction like this. As we think about share buyback going forward, as we mentioned, we believe we can continue our share buyback roughly as we talked about with you in October and continue to maintain a really good credit profile. As to the mix of debt and cash, there's a number of different ways that this could take shape.
We'll do what ends up being the best for the company with that mix of some excess cash that we have around the world, that tax reform now makes a little bit easier to access than maybe in the past, along with some different sources of debt. You'll be seeing more of that in the coming period of time.
Thanks, Joe. Robert, next question, please.
Next question is in the line of Dan Binder with Jefferies.
Thank you. I was wondering if you could talk a little bit more specifically about what kind of top-line growth you're expecting over the next 12 months. I think you said four times retail, but I don't really know what that rate is exactly. Maybe a little bit more specificity around that. If you could discuss what the greatest sources of losses are in the business and how that may change if the growth rate is either softer or stronger than you expected. I have a follow-up.
Hey, Dan, this is Brett. From a growth perspective, we haven't given guidance on that. We did talk about what the growth has been over the last year, around 50%, both in GMV and sales. We won't be talking about that today. From a loss perspective, there's a number of different things that go into that. As you would imagine, we won't go into a detailed review of the various parts of the P&L. No different than what you see in most e-commerce companies, where they have to make decisions around margin marketing and other things from an e-commerce perspective, ensuring that they can allow the business to grow and get the scale that they want to. It's not that different from other e-commerce businesses that you would've seen.
Okay. My follow-up is around how Flipkart distinguishes itself in the market. Why do customers shop them, and if you could incorporate into that the level of competitiveness in the market. I don't know if you want to do that relative to the U.S. or in some other way that we could better understand what they're up against.
One of the things about Flipkart is it's a local Indian kind of business that's been built from the ground up, and it's incredibly customer-centric within that. We think that is one of the things that really sets it apart in this market, is that it understands its customer. It's built an infrastructure to get items to those customers. Thirdly, the fact that it's building out this e-payment platform, which connects back into the banking system and allows easy transfer of payments on an open-source system. We think it's got some key components of the business that come together. The other part about it is it's got an incredibly strong, growing apparel business as well, which is an important part of the mix for the overall health of the business. It's got three key streams.
It's got Flipkart, it's got apparel, and it's got PhonePe as well, which together we think is a unique combination within that market. From a competitiveness perspective, all of the markets we operate in around the world are pretty competitive. We've got a lot of learnings from the China market in different places, that's why we're excited about Flipkart, is because of what it brings to be competitive in that market.
Thanks, Dan. Robert, our last question, please.
Thank you. Our last question is coming from the line of Paul Trussell with Deutsche Bank.
Good morning. Just wanted to get some additional clarification on a topic that was brought up earlier. As we think about this transaction coupled with what's going on in the U.K., Brett, if you can just circle back and help us understand what the free cash flow profile as well as CapEx, how is that changing as we think about FY 2019 and FY 2020 versus prior plans that were provided? Lastly, how should we think about the reporting of this segment in the business overall? What type of details will you continue to provide on a go-forward basis, or how will it be integrated into the global GMV number and other metrics that you all provide? Thanks.
Thanks, Paul. From a free cash flow perspective, let me start with that. Given you what we have on EPS and operating income into FY 2020 should give you a pretty good idea of what you can expect from a cash flow perspective. E-commerce businesses typically aren't as capital intensive as you see with brick and mortar because of the stores you build with brick and mortar. There's fulfillment and other things like that. There's a different profile to those types of businesses, and certainly thought about that as we look at our free cash flow profile going forward. We're not going to give any more detail from a free cash flow perspective today. From a reporting standpoint, as we said, it'll be discussed within International Segment, we'll have to make decisions and judgments going forward about how we talk about it, as we always will.
We will balance out ensuring that our investors understand what's going on. From a competitive standpoint, we'll have to do what's right for the business.
Thanks, Paul. That concludes our call today. Thanks, everyone, for your time. Have a great day.
Thank you.
Thank you.
Today's conference has concluded. You may now disconnect your lines.