Homebase owner says up to 40 underperforming stores could close after £454m writedown
PUBLISHED: 16:27 05 February 2018 | UPDATED: 10:25 08 February 2018
Up to 40 Homebase stores could be closed, with 2,000 jobs lost, after its Australian parent company launched a review into the chain’s future.
Wesfarmers, which owns Homebase’s parent firm Bunnings UK, said trading at the DIY chain had been “poor” as it wrote down its value by £454m – more than the £340m it paid for the company in 2016.
A further £130m will be written off for excess or unsuitable stock and store closure provisions, Wesfarmers said.
The group is in the process of re-branding all 250 Homebase stores as Bunnings Warehouse, with 19 pilot stores – including one in Newmarket – opened in the past 12 months and another in Sprowston due to open later this year.
But underperformance at Homebase stores is expected to drag Bunnings into an underlying loss of £97m for the first half of its financial year.
Wesfarmers also confirmed between 20 and 40 of the worst performing stores could close, but a spokesman for the business said it was too early to speculate on which branches may shut.
Managing director Rob Scott said: “The Homebase acquisition has been below our expectations which is obviously disappointing.
“In light of this, a review of Bunnings UK 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 said that its review will evaluate the performance of rebranded pilot stores to “inform the future plans for Bunnings UK”.
In addition Peter Davis, the man who spearheaded the foray into the UK, is to retire from the business.