Wesfarmers buys online retail giant

THE heavyweight conglomerate behind Kmart and Bunnings has struck a deal to buy a leading online retailer in a move that promises to redraw Australia’s internet shopping landscape.

Wesfarmers, which also owns Target and Officeworks, will pay $230 million for Catch Group and says it will run the retailer as an independent business unit.

It will be overseen by Ian Bailey, the managing director of Kmart Group, which runs its namesake discount department store chain along with sister business Target.

Based at Bentleigh East in Melbourne, Catch was founded by brothers Gabby and Hezi Leibovich in 2006 and employs about 800 staff.

The price Wesfarmers has agreed to pay is a modest sum for the conglomerate, which has also offered to fork out more than $2.2 billion for two mining companies this year.

But it looms as a potential game changer for the e-commerce sector, given one of Australia’s 10 biggest companies by market value would also own one of the nation’s leading broadbased online retailing platforms.

Wesfarmers is yet to detail plans for Catch but could feasibly use it as its primary online store for wares sold at Kmart and Target, while using Catch’s technology to improve its own e-commerce offerings.

Rival online retailer Kogan reported a net profit of $14.1 million last financial year on revenue of $412.3 million — up more than 40 per cent from the previous year.

US online retailing goliath Amazon, however, has struggled to gain traction with its Australian store. Amazon’s Australian e-commerce business chalked up a loss last year on revenue of less than $300 million, according to company accounts.

Catch has also struggled financially in recent years.

Latest financial results show it lost $4.3 million last financial year and $17.9 million the year before, although revenue from its continuing operations jumped 18 per cent to $262 million.