Aussie Farmers Direct CEO Keith Louie is working to restore the company to profitability after posting losses of nearly $30 million over the past two years.
Aussie Farmers Direct, one of the first movers in Australia’s online grocery sector, has reported significant loses and has taken in $14 million from shareholders to keep the business alive.
According to the Australian Financial Review, Aussie Farmers lost $15.5 million over the 2014-15 financial year, bringing losses to $27.7 million for the past two years.
Both sales and gross profits fell substantially between 2014 and 2015, with higher occupancy and IT costs taking its toll on the company, together with the increasing competition in the sector.
The AFR reports that the company’s major shareholders poured $9.9 million into the company in November 2015 and another $3.9 million in May 2016.
Aussie Farmers Direct sold its Camperdown Dairy to Australian Dairy Farmers late last year, which brought in another $10.3 million for the online retailer.
The company has stated that the financial support from shareholders together with the proceeds from the sale of the Camperdown Dairy sale will be adequate to ensure debts are paid.
The company expects to return to profitability in the next 12 months by broadening its offering and moving into other food categories, like meal solutions.
Competition is ramping up quickly in the online grocer sector. Agile start-ups like Grocery Butler and Shopwings, which merged earlier this year, HelloFresh, Marley Spoon and YourGrocer have entered the space in recent years.
The dominant supermarkets, Coles and Woolworths, which have faced their own difficulties in recent times, have been slow to push into the online space. However, both have made tentative moves in this direction. Most recently, Coles began trialling its first online-only dark store.
Aussie Farmers chief financial officer Brendan Shaw told the AFR that while the company grew too quickly, CEO Keith Louie, who took over in late 2014 and previously ran Coles Online, has been focusing on strengthening the core retail and distribution business.