Wesfarmers’ online marketplace Catch Group triggers round of redundancies
Wesfarmers paid $230m for online marketplace Catch Group in 2019, but the loss-making retailer is struggling to lift sales and has now made mass redundancies.
Loss-making online marketplace Catch Group, which was bought by Perth-based conglomerate Wesfarmers for $230m in 2019, has embarked on mass redundancies in the face of growing losses for the online retailer and a slowdown in consumer spending, accelerating the pace of job losses in Australia’s tech sector.
A spokeswoman for Catch confirmed the loss of 100 jobs.
“Like many eCommerce brands, Catch has made the difficult decision to reduce its workforce as the business adjusts to changes in online demand that has occurred following the Covid period. We want to be as efficient as possible to drive value for our customers.
“Approximately 100 team members in Australia are impacted, with redeployment where possible across the Group a key focus. Functions impacted include marketing, product and technology and finance.
“Treating people with respect is our number one priority and we are providing outplacement support to impacted employees.”
It is believed the job losses represent around 30 per cent of the workforce.
It comes as the tech sector faces a wave of job losses, with global corporates such as Salesforce, Amazon, Facebook and Twitter all sacking workers both in Australia and overseas, and local tech companies such as online book retailer Booktopia recently laying off 10-15 per cent of its Australian workforce. Online arts portal Redbubble said last month it would make around 14 per cent of its workforce redundant.
The lay-offs at Catch come as the once promising online retailer struggles to lift sales and earnings.
In June 2019 Wesfarmers unveiled its $230m purchase of Catch from its co-founders and owners, entrepreneurial brothers Gabby Leibovich and Hezi Leibovich, and at the time the online marketplace had around 800 staff.
The deal came amid a flurry of bolt-on acquisitions at the time made by then recently appointed Wesfarmers chief executive Rob Scott
“Catch Group has a high calibre management team and a leading e-commerce platform with quality fulfilment assets,” Mr Scott said at the time. “This acquisition represents an opportunity to accelerate Wesfarmers and Kmart Group’s digital and e-commerce capabilities whilst continuing to invest in the unique customer and supplier proposition provided by Catch Group.”
Latest 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.
Former investors in Catch have included casino billionaire James Packer and the co-founder of online employment service Seek, Andrew Bassat.
Wesfarmers bought Catch only months before Covid-19 struck, which would eventually put a rocket under the online marketplace’s revenue. However, it struggled to actually turn profitable through the pandemic, and its losses grew at an alarming rate.
Catch posted a pre-tax loss of $44m for the first half of 2022, a full-year loss of $46m in 2021 and a profit of $1m in 2020. For the first half of 2022, its gross transaction value only lifted 1 per cent to $616m and its actual revenue fell 4.3 per cent to $315m at a time when other online retailers have recorded booming sales.
For the 2022 full year Catch posted a 1.6 per cent lift in transaction value to $989m but losses almost doubled to $88m.
To help stem the flow of losses and improve its performance, Wesfarmers announced in April last year a restructure of the loss-making Catch that would see jump from being part of its Kmart division to join Wesfarmers new data and digital division, now called Wesfarmers OneDigital.
The move saw departure of Catch managing director Pete Sauerborn at the end of June 2022, having only joined the company in May 2020.
Catch is now the responsibility of Wesfarmers executive Nicole Sheffield, a former executive at Australia Post and News Corporation, and currently includes loyalty program OnePass and the Advanced Analytics Centre.
Wesfarmers is slated to issue its latest interim results on February 15.
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