Screws come loose at Homebase for chastened Aussie parent

Comment Martin Flanagan

Another day, another retailer holed near the waterline. Ironically for a homeimprovement business, embattled Homebase doesn’t trust DIY to secure its cloud-flecked future, however.

The City grapevine is that instead Homebase has drafted in specialist company doctors, Boston Consulting Group (BCG), to decide where the battered business goes from here.

It won’t be a tea party, Boston, as the UK retailer looks a basket case, and not one you hang outside in suburbia. The Australian conglomerate Wesfarmers showed dubious timing to buy Homebase from Home Retail Group (HRG) for a dizzylooking £340 million in January 2016.

It was part of the dismemberment of HRG, as Sainsbury’s swooped separately for its bigger business, the Argos home goods chain. Sainsbury’s has palpably got the better of it, Argos delivering pretty impressively.

In stark contrast, Homebase has floundered despite a promise by its new owners to spend £500m upgrading its 265 sites. It had always been a slightly niche-looking home-improvement business, hindered by having a much bigger DIY rival in Kingfisher’s B&Q.

But Wesfarmers also looks to have blundered by a helter-skelter and underresourced rebranding of some Homebase stores to its flagship Bunnings brand back home.

There may also have been a management vacuum as the new owners rapidly fired Homebase’s senior management and about 150 middle-managers in short order after the acquisition. Now the chickens have come home to roost.

In short, too much change was happening front of house, while UK management with local consumer knowledge and insight were being dispensed with.

Wesfarmers posted a massive £584m writedown from the acquisition two months ago, and warned that 40 Homebase stores could close, jeopardising 2,000 jobs. The dreaded “strategic review” of the chain has followed. It is usually bland business-speak for a likely sale to cut your losses and accept loss of face, or severe retrenchment to a smaller entity with lowered sights Even in a UK climate of relentless retail collapses and pressures, Homebase looks an object lesson in how to screw it up.