Homebase to shut 42 stores
HOMEBASE plans to close 42 stores with the loss of up to 1,500 jobs as it fights to repair its finances after two years under foreign ownership.
The DIY chain will also seek rent reductions on a further 70 sites in a restructuring known as a Company Voluntary Arrangement, which will require the support of its creditors.
About 70 per cent of its 241 outlets are making a loss and a review by new owner Hilco, the restructuring group which bought the business from Australia’s Wesfarmers for £1 in May, found rents were “unsustainable” and the portfolio “no longer viable”.
A meeting of creditors will take place on August 31 and if voted through, stores will close late this year and early in 2019.
Homebase chief executive Damian McGloughlin 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.”
The company said it would make “every effort” to redeploy staff affected by the closures. It stressed that the process would have no impact on customer purchases, outstanding orders or any product or service guarantees.
The use of CVAs has drawn criticism from landlords, who say they have been unfairly treated compared with other creditors and have called for an urgent Government review.
Stephanie Pollitt, assistant director of real estate policy at the British Property Federation, said: “These situations are never easy as property owners need to take into consideration the impact on their investors, including those protecting their investors’ pensioners’ savings, as they vote on the CVA.
“Homebase and [restructuring experts] Alvarez & Marsal have, however, demonstrated best practice.”
Wesfarmers lost about £200million on Homebase after buying it for £340million in 2016. It removed lines such as bathrooms, kitchens and soft furnishings.