Wesfarmers share price higher on Catch closure
The Wesfarmers Ltd (ASX: WES) share price is rising on Tuesday.
In morning trade, the conglomerate's shares are up 1.5% to $72.76.
This follows news that the Kmart and Bunnings owner is closing down its Catch online retail business.
Wesfarmers share price higher on Catch closure
This morning, Wesfarmers revealed that Catch will cease to trade as a standalone operating business in the fourth quarter of the 2025 financial year.
According to the release, Catch's dedicated e-commerce fulfilment capabilities at its Moorebank, New South Wales and Truganina, Victoria fulfilment centres will be transferred to Kmart Group. This use of centralised fulfilment is expected to improve the customer experience and efficiency of Kmart Group's e-commerce operations.
Select digital capabilities developed in Catch, including specialist personnel and supplier relationships, will be transferred to Wesfarmers' retail divisions.
Commenting on the closure, Wesfarmers managing director, Rob Scott, said:
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.
What's next?
Management notes that the closure will eliminate the losses associated with Catch as a standalone entity and strengthen the retail divisions' omnichannel offers.
Though, that doesn't mean there won't be any losses arising from the move. Wesfarmers expects to record one-off costs associated with the wind down and transition of Catch of between $50 million and $60 million. These will be included in the results for the second half of the 2025 financial year.
It is also worth noting that this amount does not include the operating losses Catch is expected to incur from trading in the 2025 financial year.
Subject to review by the company's auditor, the Catch business is expected to report a first half operating loss before tax of between $38 million and $40 million.
In light of this, Rob Scott believes that the move was in the "best interests of shareholders and would better leverage the assets and capabilities developed within Catch." He adds:
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.
And while some may call the $230 million acquisition of Catch a costly mistake, Scott sees it a different way. He said:
Since the acquisition of Catch in 2019, Wesfarmers' retail divisions have significantly enhanced their data and digital operations, recording more than $3 billion in e-commerce sales and 220 million monthly digital interactions with customers in the 2024 financial year. Wesfarmers' retail divisions currently represent the largest non-food, omnichannel retail group in Australia.
The Wesfarmers share price is up 25% over the past 12 months.
The post Wesfarmers share price higher on Catch closure appeared first on The Motley Fool Australia.
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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