Homebase is set to close 42 stores, putting up to 1,500 jobs at risk, as it launches a company voluntary arrangement in a bid to cut costs
Australian company Wesfarmers sold the loss-making DIY chain to Hilco for just £1 in May, two years after purchasing it for £350m, describing it as a “disappointing” investment.
On Tuesday, the retailer said its sales performance and profitability had "declined significantly under the previous ownership over the last two years".
Wesfarmers had originally aimed to rebrand the business as Bunnings, which is the name of the firm’s DIY chain in Australia.
"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," the firm said.
Homebase said the CVA would allow it to make "essential changes to its store portfolio, reducing its cost base and providing a stable platform on which to continue its turnaround".
The store closures are expected in either late 2018 or early 2019. The company said it expects a reduction of 1,500 staff, but said "every effort will be made to redeploy team members within the business where possible".
When the retailer was sold to Hilco, shop workers’ union Usdaw said staff were concerned about the next step.
“Staff in Homebase stores are extremely worried for the future after company’s ownership changes hands yet again. Clearly the sale for just one pound is very disturbing,” said Usdaw national officer Dave Gill.
“Obviously the Wesfarmers ownership has been a disaster and we are hopeful that Hilco can help turn the business around. It is crucial that the company listens to the staff and invests in their experience and expertise to make a success of the business from the currently very low base.”
