2,000 jobs at risk as Homebase DIY may close 40 stores
● Australian parent group says the performance of UK business ‘poor’
Jobs bloodletting in the high street continued yesterday when the Australian owner of UK DIY chain Homebase indicated up to 40 stores could close with the potential loss of nearly 2,000 jobs.
Wesfarmers paid £340 million for Homebase in early 2016, but said trading at the chain had been “poor”, as it said it was to take a £454m impairment charge linked to the acquisition.
The group, which runs the DIY chain through its Bunnings UK and Ireland (BUKI) subsidiary, said the poor trading at Homebase was expected to drag BUKI to an underlying £97m loss in its first trading half in 2018. Wesfarmers managing director Rob Scott said that, as part of a strategic review of BUKI, stock writedowns of £37m, relating to excess, unsuitable and display stock, would be taken, along with store closure provisions of £40m in the next interim results.
Scott said: “The Homebase acquisition has been below our expectations which is obviously disappointing. In light of this, a review of BUKI has commenced to identify the actions required to improve shareholder returns.”
He added: “We need to address underperformance in our portfolio that is detracting from positive performance in other areas, and the announcement today sets out decisive actions to achieve this.” Wesfarmers has been rebranding Homebase as Bunnings in the UK, revamping the stores and slashing prices. But Wesfarmers said that its review will evaluate the performance of rebranded pilot stores to “inform the future plans for Bunnings UK”.
The group said it would in future be taking a “disciplined approach” in investing futher capital in the UK business.
In addition, Peter “PJ” Davis, the man who spearheaded the foray into the UK, is to retire from the business with Damian Mcgloughlin taking his place.
Homebase operates from 250 stores, including 19 in Scotland, and employs 12,000 in total in the UK. The latest looming job losses in the retail sector come after a miserable January for the high street.
In the supermarket sector, Tesco revealed that it is to shed 1,700 jobs, 1,500 are to go at Morrisons and Sainsbury’s revealed “thousands” would be lost.
Home improvement group B&Q cut 200 jobs at its HQ last month, while food retailer Asda announced last September that it would be laying off about 300 workers at its headquarters in Leeds.
The UK’S retailers have been struggling in the face of high inflation, fragile consumer confidence and a migration to Amazon and other online shopping avenues.
Wesfarmers is to announce the result of its review in June, so staff will be in limbo until then on which stores are to close. However, the Australian group said it had been encouraged by the performance of stores that had begun trading under the Bunnings name.