humm group is rationalising its consumer division to cut its exposure to the small-payment, pay-in-four buy now pay later segment, and will make big-ticket instalment purchases its core consumer offering.
humm group chief executive Rebecca James announced yesterday that the company has stopped offering hummpro, a BNPL offering for small business, and closed bundll (a BNPL product for small payments) in New Zealand.
humm’s consumer division was to have been sold to Latitude Group but the sale was called off in June, following a campaign against the deal by humm founder, director and shareholder Andrew Abercrombie.
The company will continue to offer another small-payment BNPL product dubbed “humm little things”, but will only offer it through merchants as a companion to its big-ticket offering.
The company will no longer market direct to consumers. In future, sales will be originated through merchants.
humm’s market for “big things” has an average transaction value of A$4000, with spending typically on healthcare, car servicing, home improvements and travel.
The New Zealand consumer business will be based on existing card offerings.
It was only a couple of years ago that humm decided to ramp up its presence in the BNPL market and some of the products being closed were launched then.
The company included a $207.5 million impairment of goodwill and other intangible assets in its 2021/22 accounts, which tipped it into loss.
It reported a loss for the year of $170.3 million, compared with a profit of $60.1 million in 2020/21.
After adjusting for one-off costs, the company reported a cash profit of $51 million – down 25.3 per cent from $68.4 million in the previous year.
James said the company is also reviewing its international investments. It has operations in Canada and the United Kingdom and James said the investment spending in those markets is “high”.
She said the priorities for the year ahead are to simplify and consolidate its technology, consolidate its customer service centres and cut costs.
The commercial division had a good year, with receivables growing from $900 million to $1.5 billion. The division’s cash profit rose 28.7 per cent to $29 million.
One positive for the company was better credit management. Net losses as a proportion of revenue fell from 3.5 per cent in 2020/21 to 2.8 per cent in the year to June. The company said this was a result improved use of credit decisioning data.