Homebase to cull stores

DIY CHAIN Homebase is to close a quarter of its stores and has ditched its managing director after a review by parent company Home Retail Group found failings in its sales performance.

No decisions have yet been made about the stores to close and the number of jobs affected but there will be concern about the development in the retailer’s 323 outlets throughout the UK.

There are six in Tayside, Fife and Central at Dundee, Perth, Glenrothes, Kirkcaldy, Dunfermline and Stirling.

The group, which also owns Argos, said about 80 outlets would close up to early 2018. It is already shutting 30 this year.

A review was launched as online rivals and the rise of a generation “less skilled in DIY projects” threatened a sector already squeezed by the economic downturn.

Homebase was s a ddled with “inconsistent store operating standards” as well as “a large estate with low sales densities that result in a challenged financial model”.

The shake-up

will aim

to improve product availability and presentation, and instil “a culture of both efficiency and great customer service in stores”.

It will also seek to take advantage of online technology developed by Argos.

The Home Retail Group have a three-year plan for the revitalisation of the Homebase business for the future.

The closures would be achieved through scheduled lease expiries and sales to other retailers.

Once closure sites are identified, their staff will be the first to be informed.

Where possible, personnel will be redeployed to other stores within the group or buying retailers will be encouraged to offer these staff roles within their businesses.

Home Retail Group’s half-year results showed that sales and profits were rising at Homebase but earnings growth lagged behind that of Argos where they soared by 57%.

Group chief executive John Walden said Homebase’s three- year plan would “improve the productivity of its store estate, strengthen its propositions and accelerate digital capabilities”.

“This will position Homebase as a smaller but stronger business, ready for investment and growth,” he added.

Homebase managing director Paul Loft is stepping down after a business review.

The group reported a 13% rise in its headline “benchmark” pre-tax profit to £30.9 million for the half- year to August 30.

Reported pre-tax profit fell 5% to £13.5m, however, after taking into account costs of a plan to transform Argos plus the effect on the bottom line of property provisions and currency movements.

MARKETS

Group sales increased by 3% to £2.67 billion, with like-for-like sales up 2.9% at Argos and 4.1% at Homebase.

Argos saw sales from mobile and tablet devices rise by 45% as its benchmark operating profit soared by 57% to £12m.

Mr Walden, the former Argos chief who was promoted to lead Home Retail, said the group had performed well but the full-year outcome will depend on the important Argos Christmas trading period.

Shares in Home Retail Group closed up 2.45 points at 178.05 yesterday.