Wesfarmers acquires stake in e-commerce group

onthego1Wesfarmers has acquired an equity stake and formed a joint venture relationship with leading e-retailer ONTHEGO (OTG).

The deal is one of the first investments made under chief executive Rob Scott’s effort to build the company’s digital offerings.

The global e-commerce group enables users to design and manufacture custom apparel and accessories, and will be used as a vehicle for Wesfarmers’ Workwear Group to grow its online capabilities, enhance its customer proposition and extend into new product categories.

“This is a great opportunity for the Workwear Group to disrupt itself,” said Doug Swan, CEO of Workwear Group, “and further enhance its position as Australia and New Zealand’s leading uniform provider.”

Mick Spencer, CEO of OTG, believes the capital raise would secure their position as the disruptive leader in the uniform and sports apparel industry.

“This deal demonstrates that the market sees value in OTG’s digital disruption model. By bringing the OTG platform to the Workwear Group we will be able to offer customisation and on-demand manufacturing, leading to an enhanced retail offer for their customers,” Mr Spencer said.

“This joint venture gives us volume, scale, and access to the Workwear Group’s  extensive network.

“While sportswear apparel will continue to be a core part of OTG’s business, we are maturing as an organisation and expanding into many other verticals, including uniforms, workwear and corporate wear.”

The venture comes after rising concern over Wesfarmers’ mergers & acquisition track record following the Bunnings UK and Ireland (BUKI) debacle.

“Whilst there has to be accountability I don’t want people to feel nervous and afraid to pursue new opportunities and take risks,” said Scott, “We’ve acknowledged that we needed to strengthen our capabilities.”

“There was an underestimation of the competitive environment and there was also arguably an overly optimistic outlook in terms of growth opportunity and the capital investment that was required.”

Wesfarmers said it will record a loss of between $350 to $406 million from the BUKI divestment.

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