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Highlights
- Share Price Movement: Wesfarmers' shares rose 1.5% in morning trade to AU$72.76 following the announcement.
- Closure of Catch: Catch online retail business to cease standalone operations in Q4 FY2025, with key assets integrated into Kmart Group.
- Financial Impact: Closure to result in one-off costs of AU$50–AU$60 million but is expected to strengthen omnichannel retail operations.
Wesfarmers Ltd (ASX:WES) shares surged 1.5% on Tuesday morning, trading at AU$72.76, following the company's announcement to shut down its Catch online retail business. The decision is part of Wesfarmers’ strategic effort to enhance its retail divisions and streamline operations amid rising competition in the e-commerce space.
Transition Plan
Catch’s e-commerce fulfilment operations at Moorebank (NSW) and Truganina (VIC) will be absorbed into Wesfarmers’ Kmart Group. This centralised fulfilment model is expected to improve operational efficiency and enhance the customer experience across Kmart’s e-commerce offerings.
Additionally, Wesfarmers plans to transfer key digital capabilities developed by Catch, including specialist personnel and supplier relationships, into its broader retail divisions.
CEO Commentary
Wesfarmers Managing Director Rob Scott explained that the closure is a response to the increasing competitiveness of the Australian e-commerce market.
“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.”
Scott also noted that while the acquisition of Catch in 2019 faced challenges, it provided valuable insights and technological advancements, including support for the development of the OnePass membership program.
Financial Implications
The closure of Catch as a standalone entity is expected to result in one-off wind-down and transition costs of AU$50–AU$60 million, which will be recorded in the second half of FY2025. These costs exclude operating losses that Catch is anticipated to incur during the financial year.
For the first half of FY2025, Catch is expected to report a pre-tax operating loss of AU$38–AU$40 million, subject to audit review.
Despite these costs, Wesfarmers believes the move will eliminate ongoing losses from Catch and better leverage the company’s existing assets and capabilities.
Market Outlook
Wesfarmers' retail divisions, bolstered by omnichannel offerings, have recorded over AU$3 billion in e-commerce sales and 220 million digital interactions monthly in FY2024. As the largest non-food omnichannel retail group in Australia, Wesfarmers is well-positioned to capitalize on future growth opportunities.
The company’s share price has risen 25% over the past year, reflecting strong investor confidence in its broader retail strategy.
