Woolworths Groups faces $100m blow as it shuts major online retailer MyDeal after purchasing it just three years ago
The nation's largest grocer on Friday revealed it will axe the online marketplace to grow its Big W Market and Everyday Market sites.
Woolworths Group's chief executive Amanda Bardwell said the decision to close MyDeal follows a warning to investors in February that the company was assessing its portfolio to crackdown on unprofitable parts of the business.
'MyDeal has brought marketplace expertise and leading technology to the Group's marketplace platform, Woolworths MarketPlus, enabling rapid (gross merchandise value) growth,' Ms Bardwell told shareholders.
'However, given the intensely competitive environment and the superior economics of marketplaces integrated into retail brands, we have made the decision to close the MyDeal customer website.
'The closure of MyDeal will lead to a meaningful reduction in Woolworths MarketPlus operating losses once completed.'
She said Woolworths will continue to use MyDeal's platform, assets and relationships for Big W Market and Everyday Market.
The closure is expected to cost Woolworths between $90m and $100m.
This money will mainly go to buyout the stakes of the founders alongside redundancies for outgoing employees.
Woolworths will report a further $45m from the loss of MyDeal's assets through the closure.
RBC Capital Markets analyst Michael Toner praised Woolworths' decision as the online retailer struggled to turn a profit.
'We view this as a positive, albeit incremental, step towards portfolio simplification as MyDeal had no near-term path to profitability,' Mr Toner said in a statement.
Woolworths valued the once-ASX listed MyDeal at $243m when it purchased the retailer in 2022.
MyDeal will be closed by September 30, but most of the staff will move within Woolworths Group, the company said.
Wesfarmers similarly shut down its online retailer Catch Group earlier this year and cited tough competition from giants such as Temu and Amazon.
Woolworths' share price has shed 1.1 per cent as of about 1pm Friday after informing shareholders of its plans to dump MyDeal.
The company is down more than eight per cent over the past 12 months.
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