Wesfarmers boss’s gamble on Catch Group pays dividends

The decision by Wesfarmers CEO Rob Scott to buy online marketplace Catch Group last year is proving a winning strategy

Gross tran­saction value for Catch Group was up 21.4 per cent for the first half of 2020.

The decision by Wesfarmers chief executive Rob Scott to pay $230m for online marketplace Catch Group last year, which was viewed with a mix of scepticism and scoffing by many, is proving a winning strategy with the online retailer experiencing boomtime conditions during the pandemic.

As part of a trading update issued to the market on Tuesday, Mr Scott revealed the potency of the online department store and marketplace, with it enjoying like many other online stores record sales at a time when home isolation and restrictions on mobility are generating a new renaissance for shopping on the web.

Issuing a sales performance to May, Wesfarmers said gross tran­saction value for Catch Group was up 21.4 per cent for the first half of 2020, but that had accelerated to growth of 68.7 per cent for the second half to date. For the full financial year, representing 11 months of fiscal 2020, Catch sales were better by 43.7 per cent.

“Pleasing progress continues in Catch, with strong growth in both in-stock and marketplace segments and ongoing growth in Club Catch subscriptions,’’ Wesfarmers said in its update.

Wesfarmers said that on a financial year to date basis, total online sales across the Perth-based conglomerate increased by 60 per cent to $1.4bn, or $1.9bn including Catch.

Mr Scott unveiled in June last year his $230m acquisition of Catch which came at a busy time for the Wesfarmers CEO as he also launched a $1.5bn tilt at rare earths miner Lynas — that was ultimately pulled — and a successful $776m takeover bid for lithium company Kidman Resources.

At the time Mr Scott said Catch would complement Wesfarmers’ existing businesses as it leans in greater to the world of online retail.

“Catch Group has a high calibre management team and a leading e-commerce platform with quality fulfilment assets,” Mr Scott said in June last year. “This acquisition represents an opportunity to accelerate Wesfarmers and Kmart Group’s digital and e-commerce capabilities while continuing to invest in the unique customer and supplier proposition provided by Catch Group.”

Catch Group was co-founded by Gabby Leibovich and Hezi Leibovich more than 10 years ago and employs around 800 staff. Its last financial results showed Catch lost $4.3m in fiscal 2018, down from a loss of just over $17m in 2017. In 2018 revenue rose more than 40 per cent to $262m.

In May Mr Scott said Catch had experienced strong demand, with shoppers staying at home and shopping online.