Fears as Homebase looks for new buyer

Australian owner Wesfarmers cleared out the British retailer’s managerial team after buying it in 2016, but has failed to imrove its fortunes

Homebase slumped to a £97m trading loss over the second half of last year and Wesfarmers was forced to write-down the value of the UK business by £550 million.

The store has a number of branches in the region, including in Telford, Market Drayton, Whitchurch, Wolverhampton and Wrexham. The Homebase brand is gradually being changed to Bunnings as part of a UK drive to improve business, although it is not known when the stores in this region will change.

It has been reported that Wesfarmers has begun approaching potential buyers in recent weeks.

Investment bank Lazard was drafted in to conduct a strategic review of the Homebase business in February. At the time Wesfarmers revealed plans to close up to 40 stores, with the potential loss of around 2,000 jobs.

Rob Scott, the managing director of Wesfarmers, said that he was “keeping all options open” for the Homebase business, including a potential sale.

While confirming that a strategic review is ongoing, Homebase has declined to comment on reports that it wants to sell.

Replicate

Wesfarmers owns the successful Bunnings chain in Australia and had been hoping that it could replicate that success in the UK as it battles against market leader B&Q.

The rebranding has so far centred on the south of England, but the aim is to spread that out to all branches including those in Shropshire.

By the end of March just 22 stores had been converted, leaving 227 Homebase stores and another four closed for conversion. Wesfarmers said early results from stores that had switched were “encouraging”, but warned gains had been sluggish during the winter months.

Alongside its trading loss, Homebase’s sales were down 15.7 per cent to £517 million over the six months to December. It employed nearly 12,000 people in the UK at the end of last year.

Wesfarmers blamed “inconsistent store standards” and “poor execution” for the interim results. It said new product lines had failed to make up for lost sales from discontinued ranges.

The poor weather over Easter is also unlikely to help the fortunes of Homebase. The long weekend is traditionally one of the busiest of the year, especially with gardeners, but the poor weather is likely to have kept people indoors.

Damian McGloughlin, a former B&Q executive, was made managing director in January after Peter Davis, who had run Homebase, stood down. In 2016, Mr Davis said the Homebase brand would be gone within five years.