Wesfarmers has confirmed that it will cut its losses and kill its Catch business in the fourth quarter of FY2025.

The online marketplace has faced stiff competition from the likes of ultra-cheap retailers Shein and Temu which have attracted millions of shoppers in the span of a few months after launching into the Australian market as well as Amazon’s marketplace.

In an update to the ASX Wesfarmers said that Catch’s e-commerce fulfilment centres will be transferred to Kmart Group, while some of the digital capabilities developed in Catch will be transferred to Wesfarmers’ retail divisions.

Wesfarmers expects to record one-off costs associated with the closure of between $50 million and $60 million.

Catch has accumulated an operating loss before tax of between $38 million and $40 million for the half-year ended December 31, 2024.

 

Wesfarmers acquired Catch Group in June 2019 for $230 million and since then the business has failed to turn a profit with the online operation bleeding losses which cost the group millions of dollars.

As of June 2024, the business reported another $96 million loss which was actually down on the $163 millon loss of 2023. Its gross transaction value declined 28.5 per cent to $524 million.

In a statement to the ASX on Tuesday, Wesfarmers said that its decision to wind down Catch “will eliminate the losses associated with Catch as a standalone entity.”

“The recent increase in competitive intensity in the Australian e-commerce sector has affected Catch’s financial performance and growth prospects. In this environment, the Group’s retail and health businesses, with their leading omnichannel offerings and trusted brands, are better positioned to respond as the market and customer expectations evolve,” said Rob Scott, Wesfarmers’ managing director.

“While Catch’s financial performance has been challenging, we have gained valuable insights and capabilities that have accelerated the Group’s digital transformation and supported the development of the OnePass membership program,” added Scott.

 

He noted that since Catch’s acquisition in 2019, Wesfarmers’ retail divisions has recorded more than $3 billion in e-commerce sales and 220 million monthly digital interactions with customers in the 2024 financial year.

Scott had also previously indicated that the likes of Amazon and Temu “certainly keep us up at night.” “The big international retailers, the likes of Amazon, Temu and others… certainly keep us awake at night, but are the ones that seem to have been conveniently forgotten in the recent discussions on retail competition,” he told The Australian Financial Review last year.

The company hasn’t indicated the number of redundancies that it expects from the latest decision, but it said that affected employees would be redeployed within the group, where possible.

Catch’s e-commerce fulfilment capabilities at its Moorebank, New South Wales and Truganina, Victoria fulfilment centres will be transferred to Kmart Group. The move is expected to enhance Kmart Group’s e-commerce operations. “Kmart Group can better utilise Catch’s fulfilment centres, which are currently less than 50 per cent utilised,” said Kmart Group Managing Director Ian Bailey.