Australian marketplace Catch has recorded a $163 million loss in FY23, including restructuring costs of $40 million relating to inventory provisions, team member redundancies and asset write-offs.
The result followed a mid-year loss of $108 million.
Catch’s gross transaction value (GTV) declined 25.9 per cent to $733 million during the year, with full-year sales down 30.6% to $354 million.
In the second half of FY23, Catch’s revenue was $135 million, down from $195 million in the prior corresponding period.
Parent company Wesfarmers noted that Catch’s “disappointing” performance was impacted by changing customer demand, poor margin outcomes in the in-stock range and elevated supply chain costs.
“Restructuring actions and changes to management commenced late in the first half and were implemented through the second half of the 2023 financial year,” Wesfarmers confirmed in a trading update today.
“Catch also incurred additional supply chain costs associated with the commissioning and ongoing developments at the Moorebank automated fulfilment centre in New South Wales, as well as higher transport and fuel costs.”
In response to the results, Wesfarmers commenced restructuring actions and changes to management late in the first half of FY23 and were implemented through the second half.
This included appointing new heads across retail, technology and supply chain, with a reduction in overall headcount by 37% earlier in the year, alongside exiting from unprofitable ranges in the 1P business.
Wesfarmers noted performance in the second half indicates signs of progress from restructuring activities, with losses excluding restructuring costs reducing from $75 million in the first half to $48 million in the second half.
“While significant further progress is still required, initial improvements have been supported by lower employee costs from reduced headcount, the exit of unprofitable ranges and a significant reduction in SKU count in the in-stock business, and a significant reduction in inventory balances.
“Marketing spend efficiency increased during the second half, and initiatives to improve fulfilment processes supported significantly reduced labour costs per unit and average days to despatch.”
Investments made in Catch in recent years are being leveraged across the group, according to Wesfarmers, to provide some centralised e-commerce fulfilment capabilities and strengthen digital marketing programs.
“Further, Catch continues to attract and retain a younger and digitally-native customer cohort with strong OnePass engagement, supporting ongoing development of the program.”
Wesfarmers noted that Catch is expected to remain loss-making in the 2024 financial year, with losses continuing to reduce relative to the result in the second half of the 2023 financial year.
Looking ahead, Catch is expected to continue reducing its in-stock range, exiting additional unprofitable lines and curating the range to focus on in-demand categories, while driving efficiency and productivity, and undertaking cost control such as lowering discretionary costs and rephasing spending.
“While these restructuring activities are being completed, Catch will continue to develop strategies for a more successful and sustainable customer value proposition that provides customers with everyday value, reliable delivery, a more compelling in-stock and marketplace range, and greater value through the OnePass program.”
Wesfarmers MD Rob Scott said investments to date are benefitting group digital and e-commerce initiatives, with actions taken during the year supporting progress in the second half.