Threat to 1,500 jobs as retailer Homebase axes 42 stores
HOMEBASE is moving ahead with a wave of store closures that will see 42 DIY outlets shut, putting around 1,500 jobs at risk.
The retailer is closing the stores via a Company Voluntary Agreement (CVA), a controversial insolvency procedure used by struggling firms to shut under-performing shops.
Restructuring experts at Alvarez & Marsal will carry out the CVA, which will require the support of landlords.
The list of closures includes the outlet on Cardiff ’s Newport Road. The Homebase store that was located at Culverhouse Cross closed in March this year. The site has since become an outlet for The Range.
It was first reported in June that Homebase was exploring further store closures through the procedure.
The latest restructuring would come on top of a store closure programme the retailer has been carrying out since February.
A total of 16 Homebase stores have been shut this year and the business has also axed 303 jobs at its head office in Milton Keynes.
Homebase could see some resistance from landlords to the CVA, with the property industry expressing disdain for the procedure, saying it leaves them out-of-pocket.
Hannah Maundrell, Editor in Chief of money.co.uk said: “It’s undoubtedly distressing news for employees of Homebase and their families, especially those who are yet to find out their fate. Homebase staff have been left in limbo.
“Those who fear they could lose their jobs should hope for the best but prepare for the worst. Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case.
“Sadly this isn’t the beginning of redundancies in the retail sector this year and I doubt it will be the end. Shoppers habits are changing, purse strings are tightening and our reluctance to pay full price becomes more problematic for stores.”
CVAs have been adopted by a host of retailers including New Look, Carpetright and Mothercare. Prior to its acquisition by Mike Ashley’s Sports Direct the House of Fraser chain had been subject to a CVA, which was set to see 31 stores close. The future of House of Fraser, and its two stores in Wales, is now unknown.
The Homebase store closures follow the sale of the business earlier this year by its former Australian owner Wesfarmers to Hilco, a retail turnaround specialist, for £1.
Homebase was bought by Wesfarmers for £340 million in 2016.
Wesfarmers is known for its Bunnings chain in Australia, and attempted to import the home improvement brand to the UK by converting a host of Homebase stores into the Bunnings format. However, the strategy ended in disaster.
Prior to the Hilco takeover, Homebase had 250 stores at its peak and 12,000 staff.