More than 2 in 3 Homebase stores losing money ahead of CVA vote

1355

More than 70 per cent of Homebase stores are now losing money following the disastrous takeover attempt by Australian conglomerate Wesfarmers.

According to the Financial Times, in a document the home and DIY retailer prepared for its creditors it explained that more than two in three stores are in the red, while laying out a three-year turnaround strategy.

It also warned that should its CVA, which is due to be voted on by creditors next week, was not approved “it is very likely Homebase will go into administration or liquidation”.

The CVA is set to see 42 of its 249 stores close, and between 25 and 90 per cent rent reductions secured on another 70.

It has also proposed new funding of £25 million from its new owner Hilco and up to £116 million of debt.

Several landlords have already expressed their opposition to the CVA, with one telling the Financial Times: “I cannot see any upside for me in supporting this CVA.

“I don’t see why people who’ve done right by the company should lose out purely because of mismanagement and a lack of commercial nous.”

The home and DIY retailer’s financial woes come after the Australian retail conglomerate Wesfarmer’s short-lived attempt to use it as a springboard into the UK market.

After purchasing the company in 2016, Wesfarmers began to convert Homebase stores to its Bunnings fascia, resulting in a loss on the disposal of between £200 million to £230 million and forcing it to jump ship and sell the UK arm of company to Hilco for £1.

Since its takeover, Hilco has been closing stores and streamlining its operations, resulting in 303 jobs being cut at its head office in June.

Its new turnaround will see popular products and brands return to its shelves which were dropped by Wesfarmers, alongside the return of concessions from the likes of Laura Ashley and Habitat.

Click here to sign up to Retail Gazette‘s free daily email newsletter

2 COMMENTS

  1. I really hope Hilco successfully turn Homebase back to profit. There really is a place for Homebase between Wilko and B&Q. I think its advertising could be better as it often matches those mentioned. I think they should show you how to spruce up furniture. Show how new handles and paint can make your generic Ikea cupboard original for a few quid. Recommend curtains and cushions to go with the new paint colour of the season etc.

LEAVE A REPLY

Please enter your comment!
Please enter your name here