Homebase sold for £1 as DIY disaster ends for Wesfarmers
The Australian owner of Homebase has sold the DIY chain for £1, ending its disastrous foray into the UK.
Wesfarmers paid £340m for the retailer two years ago, but losses and other costs will bring its total bill to about £1bn.
The chain is being bought by restructuring specialist Hilco, which rescued music chain HMV in 2013.
The 24 stores that had been converted to the Bunnings brand will revert to the Homebase name.
Richard Lim, of consultancy Retail Economics, said the Wesfarmers takeover had been an "unbelievable disaster" due to "woeful management decisions, clumsy execution and a misguided perception of the UK market".
He expected the restructuring would result in store closures and more job losses on the High Street. Homebase has about 250 stores and 11,500 workers.
Dave Gill, national officer at shopworkers' trade union Usdaw, said: "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. I am in touch with the company and we are seeking urgent meetings to secure jobs."
Wesfarmers has admitted making a number of "self-induced" blunders, such as underestimating winter demand for a range of items from heaters to cleaning and storage, and dropping popular kitchen and bathroom ranges.
Rob Scott, chief executive of Wesfarmers, said the UK market proved to be "very competitive", with "quite challenging" retail conditions.
Asked whether investors could trust Australia's biggest retail group with future acquisitions, he said he hoped the disposal "demonstrates the capability of our team to act decisively".
Wesfarmers expects the disposal to cost up to £230m. It will be entitled to 20% of any future sale of the business.
Homebase chief Damian McGloughlin, who will stay on as part of the management buyout funded by Hilco, "marks an exciting new chapter" for the retailer.
"With Hilco's support we have the commitment of an experienced partner, substantial additional capital, stability for the business and the opportunity to reinvigorate a brand that has been a mainstay of UK retail for over 40 years," he said.
Hilco was given a "Turnaround of the Decade" award last year for its revival of HMV.