// Homebase returns to profit earlier than forecast – £3.2m profit for 2019 vs 2018 loss of £114.5m
// Like-for-like sales grew 2.6% and nearly all stores are profitable again
// Proposed completion of CVA is 18-months ahead of plan
Homebase returned to profit earlier than forecast as its turnaround plan has successfully made the majority of stores profitable again amidst an increase in like-for-likes.
For the year ending December 29, the home and DIY retailer delivered a £3.2 million EBITDA profit, compared with a loss of £114.5 million in 2018.
Like for like sales were up 2.6 per cent and gross margin rate was up 2.8 per cent in the year as customers responded well to new ranges, and improvements to both in-store and online shopping experiences.
- Homebase hires ex-Kingfisher group director as Bathstore director
- Homebase successfully buys Bathstore out of administration
- Homebase narrows half-year losses as turnaround bears fruit
Meanwhile, the retailer said “nearly all 164 stores are now profitable” – a stark contrast to June 2018, when Hilco Capital acquired Homebase for just £1 after a disastrous attempt by Australian retail conglomerate Wesfarmers to use it as a springboard into the UK market.
Homebase also said effective cost management across all areas allowed it to reduce its cost base by over £180 million, and its year ended with a positive net cash balance of £17 million.
The retailer attributed its success to a £10 million investment across its stores in the UK and Ireland – including 51 refurbishments last December – to create new kitchen showrooms, home furnishing departments and 49 Bathstore concessions.
The Bathstore concessions followed Homebase buying the retailer out of administration in June last year for an undisclosed sum.
Meanwhile, Homebase also invested in its website to make it easier for customers to shop, leading to sales increasing by over 50 per cent.
The retailer said more than half of its customers now start their shopping journey online.
As a result of its strong turnaround, Homebase said the proposed completion of its CVA – launched when Hilco acquired the retailer – is now likely to be 18-months ahead of schedule.
“Eighteen months into our turnaround, we’re extremely proud of what our team has achieved, working hard with our partners to return to profit and lay solid foundations for growth,” Homebase chief executive Damian McGloughlin said.
“We have a very clear vision for Homebase, and we’re excited about the plans we have for the future. We will continue to invest in our ranges, services, and team members as we make Homebase the go to place for the inspiration, expertise and products customers need to take their ideas and create homes they love.”
Looking ahead for 2020, Homebase said it plans to expand product ranges, open more concessions with leading brands, continue investing in improving its ecommerce shopping experience, and training all 6600 team members in a new customer service programme so they have the skills and knowledge advise customers at every stage of their shopping journey.
Homebase also plans to new store formats – including two small standalone stores that will be trialled in Cheadle and Sutton, which will be called Decorate by Homebase.
These stores will target customers specifically working on home decorating, with paint colour and brushes, to flooring and tiling on offer.
“In the last 12-months we’ve removed over £180 million of cost from Homebase, as well as investing to create the right foundation for growth,” Homebase chief financial officer Andy Coleman said.
“Having returned to profit ahead of plan, we are very well set to undertake further investment in our stores, ranges, the online business and our teams.
“Customer response to the changes we’re making is extremely encouraging, and 2020 will be a very exciting year for our team and customers.”