Homebase confirms CVA proposal

Homebase is to launch a Company Voluntary Arrangement (CVA) as part of its ongoing restructuring plans.

The move will see an anticipated 42 stores close during late 2018 and early 2019.

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.

In a statement, the company said: “HHGL Limited (‘Homebase’) today announces the next phase of its restructuring plan. The company is to launch a Company Voluntary Arrangement (CVA) and is seeking approval from creditors on a proposed plan to reduce its cost base in the UK and the Republic of Ireland.

“Homebase’s sales performance and profitability declined significantly under the previous ownership over the last two years. In addition, the company has faced an extremely challenging retail trading environment reflecting weak consumer confidence and reduced consumer spending. These factors have had a significant adverse impact on Homebase’s trading position.

“After a comprehensive review, Homebase has concluded that its current store portfolio mix is no longer viable. Rental costs associated with stores are unsustainable and many stores are loss-making.

“The CVA enables Homebase to make essential changes to its store portfolio, reducing its cost base and providing a stable platform on which to continue its turnaround.

“Under the terms of the CVA proposal, all creditors receive a better outcome than any other likely alternative.

“It is anticipated that 42 stores will close during late 2018 and early 2019.

“The proposed changes to the store portfolio will regrettably mean redundancies from those stores earmarked for closure. The process is expected to lead to a reduction of up to 1,500 roles, although every effort will be made to redeploy team members within the business where possible.

“All stores in the UK and the Republic of Ireland will remain open for business as usual and this process will have no impact on customer purchases, outstanding orders or any product or service guarantees.

“The creditors will vote on the CVA on August 31, 2018.”

Damian McGloughlin, chief executive of Homebase, said: “Launching a CVA has been a difficult decision and one that we have not taken lightly. Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs. The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead.”

The Homebase stores earmarked for closure are:

Aberdeen Bridge of Don
Aberdeen Portlethen
Bedford St Johns
Cardiff Newport Road
Croydon Purley Way
Dublin Fonthill
Dublin Naas Road
East Kilbride
London Merton
London New Southgate
London Wimbledon
Oxford Botley Road
Poole Tower Park
Seven Kings
Southampton Hedge End
Swindon Drakes Way
Swindon Orbital


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