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    12 Feb, 2020
    Posted by justelectric
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    Homebase cuts 300 jobs as more store closures loom | Business


    Homebase is cutting 300 jobs at its Milton Keynes head office amid speculation that up to 80 stores will close after its takeover by the restructuring specialist Hilco.

    The loss-making DIY chain was bought by the owner of HMV for £1 in a deal agreed in May after its previous Australian owner, Wesfarmers, pulled the plug on a “disastrous” venture into the UK.

    Wesfarmers, which bought the business for £340m two years ago, offloaded the entire 250-store Homebase chain, which has a workforce of just over 11,000 people, ditching a plan to convert them to its Bunnings brand.

    Homebase said a third of its head office staff would leave by November as it focused on its DIY brand. All 24 of the stores rebranded to Bunnings will become Homebase outlets again.

    Damian McGloughlin, the chief executive of Homebase, 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.”

    The job cuts come amid speculation that Homebase is considering a company voluntary arrangement, a form of insolvency, which would enable it to close up to 80 stores and renegotiate leases with landlords.

    The company has already shut 17 unprofitable stores and confirmed plans to close at least 23 more. Industry insiders said a CVA involving between 60 and 80 stores was one of a number of options being considered by Homebase’s new owner.

    The botched Australian acquisition of Homebase is seen as one of the most disastrous retail takeovers, alongside Tesco’s doomed expansion into the US market with the Fresh & Easy grocery chain.

    Wesfarmers had intended to spend £500m giving the Homebase chain a facelift, turning it into a British version of its successful Australian DIY chain, which is famous for low prices and sausage sizzles.

    However, in a tough UK market hit by a slowdown in house buying, Bunnings struggled to find a foothold amid stiff competition from rivals such as B&Q, Argos and Wickes. The company was expected to make a loss of nearly £100m in the first half of this year alone.

    The difficulties at Homebase are partly self-inflicted by a decision to stop selling home furnishings and remove popular concessions such as Habitat and Argos. But they also reflect wider problems in the UK retail sector that have led to mass closures by chains including New Look, Carpetright and Mothercare.

    In March, DIY rival B&Q, which is owned by Kingfisher, said sales dropped by 5.1% and profits for the year to the end of January were down by 10% to £682m.

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    Retailers across the board are struggling as the fall in the value of the pound pushes up the cost of buying goods overseas alongside a rise in the legal minimum wage and business rates changes. The rise of online shopping has also hit profits at traditional retailers, which are having to invest in home delivery infrastructure and IT while facing new competition from internet specialists.

    These structural changes come as shoppers rein in spending because of uncertainty caused by Brexit and a shift towards renting, rather than owning, homes.

    If Homebase does attempt a CVA it may face a backlash from landlords who have already expressed discontent at the department store House of Fraser over its planned closure of more than half of its 59 stores. The CVA won approval last week but some leaseholders are considering challenging the vote, a move possible within 28 days of it passing.


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