Homebase

Homebase to axe ‘a quarter of stores’

The owner of loss-making DIY chain Homebase is set to announce the closure of around a quarter of its 249 stores, according to Sky News.

The report said that Hilco Capital, the investment firm that bought Homebase for £1 earlier this year, is expected to outline plans for a Company Voluntary Arrangement (CVA), which would pave the way for 60 stores to shut.

This would put about 1,000 jobs at risk.

Homebase refused to comment on the report.

The home improvement chain has already closed 18 stores since Hilco agreed to buy it from Australian group Wesfarmers in May, while 300 jobs at its head office in Milton Keynes have been cut as part of restructuring efforts.

Wesfarmers paid £340 million for Homebase just two years ago in what analysts have described as one of the most disastrous takeovers in retail history.

It tried to introduce its DIY brand Bunnings into the UK, hoping to replicate its Australasian success but failed spectacularly. The Homebase stores that had been converted into Bunnings Warehouses have now all been changed back.

Homebase said in June that the withdrawal of the Bunnings brand meant it was “necessary” to restructure its head office, with a 38% reduction in headcount.

At the time, Homebase CEO Damian McGloughlin said: “We have not taken this decision lightly, but decisive action is required to start rebuilding Homebase’s position in the UK market. We will be providing as much support as we can to help those affected through this difficult time.”

Wesfarmers took a £454m impairment charge against the value of Homebase about two months before offloading it to Hilco.

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CVA deals allow companies to secure rent cuts and offload loss-making stores.

These deals been used this year by Mothercare, New Look and Carpetright.

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