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Australia's largest retail company Woolworths Group (ASX: WOW) has decided to shutter the MyDeal business it acquired a controlling stake in for $218 million in 2022, marking the end of one of the country's most successful marketplace startups.
Founded in 2011 by former Australia's Top 100 Young Entrepreneurs lister Sean Senvirtne, MyDeal listed in 2020 and boasted more than one million active customers when Woolworths bought an 80 per cent stake in the Melbourne-based group.
The founder stayed in the CEO role, retaining 18.9 per cent of the company while collecting an estimated $77 million with the share sale to Woolworths, which today revealed it would be closing the MyDeal website by 30 September.
Woolworths plans to direct the retail marketplace offer into its BIG W Market and Everyday Market, thus providing customers with an extended range while still leveraging strong traffic growth on existing digital properties.
"In February we said that we would assess the shape of the group portfolio to address areas where there was not a clear path to profitability or the prospect of a reasonable return on capital," says Woolworths Group CEO Amanda Bardwell.
"MyDeal has brought marketplace expertise and leading technology to the group’s marketplace platform, Woolworths MarketPlus, enabling rapid GMV (gross merchandise value) growth.
"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."
Woolworths projects a $90-100 million cash cost of closure, including a payment for the remaining outside equity interest under existing put and call arrangements as well as redundancies.
Non-cash costs will primarily relate to the impairment of MyDeal's assets of approximately $45 million.
"The closure of MyDeal will lead to a meaningful reduction in Woolworths MarketPlus operating losses once completed," Bardwell says.
"Woolworths MarketPlus will continue to leverage the MyDeal technology platform, seller relationships and capabilities to grow the group’s BIG W Market and Everyday Market retail banners.
"We would like to thank Sean Senvirtne and the MyDeal team for their hard work and contribution to Woolworths Group in establishing Woolworths MarketPlus.”
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