Australian home improvement group Wesfarmers has hung the for sale sign up on its Homebase business after a rocky takeover.
According to Sky News, Wesfarmers has brought in investment bankers from Lazard to review its options as it prepares to retreat from the British business, which operates around 250 stores and employs 12,000 people.
Lazard previously worked with Wesfarmers back in 2016 in an advisory role when it was in talks to buy the Homebase business. It is understood that they have now been in talks with potential buyers for the UK business.
A spokesman for Homebase confirmed that the strategic review was ongoing but declined to comment on whether potential buyers had been approached.
In its most recent trading report it anticipated a loss of £97m in the first half of 2018.
The group bought the business in January 2016 for a sum of £340 million and had planned to rebrand all of the Homebase stores into Bunnings. To date 15 stores have already been rebranded as Bunnings.
In February, Wesfarmers managing director Rob Scott said the group had written down the value of the Homebase chain by £454m due to poor trading results.
The group was expected to announce its future plans for the business on its annual Strategy Day in June, however poor weather in February and March has resulted in a further decline in sales which were previously down 15% year on year, and has damaged any interest in keeping the business.
Scott admitted that the previously management team, in the early days of the takeover which was led by Peter ‘PJ’ Davis, had “made mistakes”.
“A lot of the issues we are dealing with today, to be frank, were self-induced,” he said.
Last month, Scott insisted that pulling out of the UK was not his first choice.
“It’s not our preferred option,” he said, “but as I’ve said earlier, all options are open. There’s value in this network and we want to make sure that we reduce the trading losses and hopefully put the business on to a path to profitability.”
GlobalData’s retail analyst, Patrick O’Brien said: “Homebase is undoubtedly the most disastrous retail acquisition in the UK ever. I can’t think of a worse one that has made these kinds of losses so quickly.
“The double bank holiday is extremely important for DIY retail because it sets the tone for spring/summer,” he added. “How important it is to Bunnings depends on whether they are actually making a decision [about the future] or have already made it.”