UPDATE 2-Australia's Wesfarmers to close online retailer Catch; shares up

Writes through, updates share price and adds analyst comment

By Shivangi Lahiri and Rajasik Mukherjee

Jan 21 (Reuters) - Australian conglomerate Wesfarmers WES.AX said on Tuesday its loss-making online retailer, Catch, will cease to operate as a stand-alone entity in the fourth quarter of fiscal 2025, and its shares rose to their highest in a week.

The stock rose as much as 1.4% to A$72.76 as of 0015 GMT, hitting its strongest since Jan. 10 and is on track to log its fourth-consecutive session of gain. The broader ASX 200 index .AXJO rose as much as 1.3%.

Catch Group Holdings Ltd, formerly Catch Of The Day, started in 2006 and offers discounted deals on brands such as Nike and Armani Jeans, according to their website.

The conglomerate acquired Catch Group for about A$230 million ($144.3 million) in 2019 to boost the small online footprint of its retail units such as Kmart and Target.

"The recent increase in competitive intensity in the Australian e-commerce sector has affected Catch's financial performance and growth prospects," said Rob Scott, managing director of Wesfarmers.

The Perth-headquartered firm also expects Catch to report an operating loss before tax of between A$38 million and A$40 million, for the half-year ended December 2024.

"Catch has not adapted much to the changing market landscape including same-day delivery and other perks that competitors offer which is a key driver of it falling behind newcomers to the competitive landscape in recent years," said Grady Wulff, a market analyst at online trading platform Bell Direct.

Wesfarmers, Australia's biggest non-food retail group, said it would transfer Catch's e-commerce fulfillment centres to Kmart Group while select digital capabilities developed in Catch will be transferred to Wesfarmers' retail divisions.

"Wesfarmers expects to record one-off costs associated with the wind down and transition of Catch of between A$50 million and A$60 million, to be included in the results for the second half of the 2025 financial year," the conglomerate said in its statement.

($1 = 1.5944 Australian dollars)

(Reporting by Shivangi Lahiri and Rajasik Mukherjee in Bengaluru; Editing by David Gregorio and Jacqueline Wong)

((Shivangi.Lahiri@thomsonreuters.com;))