By The UK’s prominent garden and home improvement retailer, Homebase, is bracing for significant changes as it moves towards appointing insolvency specialists.
Administrators are expected to be appointed for the business on Thursday while looking for buyers for its assets.
The chain, owned by Hilco Capital since 2018, has reported sustained financial losses, including £21 million in 2023 and over £40 million the prior year, attributing the struggles to rising operational costs and reduced consumer spending.
Under Hilco, the chain has closed more than 100 stores in the last six years.
Administrators are expected to be appointed for the business on Thursday while looking for buyers for its assets.
CDC Stores, the parent company of The Range, has emerged as the primary buyer.
Sainsbury’s acquires 10 Homebase locations
In a proactive move, Sainsbury’s has acquired 10 Homebase locations to be converted into supermarkets, a step set to create around 1,000 new jobs.
These sites are in Sutton Coldfield, Bromsgrove, Cromer, Derry/Londonderry, Fareham, Inverurie, Lowestoft, Newark, Omagh, and Rugby.
Simon Roberts, CEO of Sainsbury’s, highlighted that this strategy aligns with their “Next Level Sainsbury’s” growth plan aimed at showcasing premium offerings and expanding market share.
The Range founder Chris Dawson also set to takeover 75 Homebase stores
Retail mogul Chris Dawson, known as the “Del Boy billionaire” and founder of The Range, is also set to acquire a significant portion of Homebase, according to The Telegraph.
The deal with administrators Teneo, expected to preserve 1,600 jobs and 75 stores, is valued at approximately £30 million and includes the Homebase brand and website.
However, this potential lifeline may not extend to all employees, as up to 1,000 jobs remain uncertain unless more buyers emerge for the remaining stores.
Talks have reportedly been ongoing with potential suitors like Wickes and Topps Tiles, but no concrete deals have materialized.
Dawson, whose company operates over 200 superstores across the UK, sees this acquisition as an opportunity to strengthen his portfolio.
Dawson told The Telegraph, “We are delighted to be able to save so many stores and jobs, and look forward to adding the Homebase brand and subsidiaries to the expanding Range group of companies.”
This acquisition follows Dawson’s purchase of assets from the collapsed Wilko chain last year.
A troubled history: From Wesfarmers’ missteps to Hilco’s stewardship
The current crisis caps years of instability for Homebase.
Its troubles began with Wesfarmers, the Australian retail giant that bought the chain in 2016 for £340 million with plans to introduce its Bunnings brand to the UK.
However, strategic missteps, including the decision to dismiss senior management and misjudged marketing efforts, led to losses exceeding £420 million.
Wesfarmers offloaded Homebase to Hilco Capital for £1 in 2018, seeking to end what had become one of its most costly international forays.
Under Hilco’s ownership, Homebase managed a brief resurgence during the Covid-19 lockdowns, benefiting from increased home improvement spending and government support measures.
Yet, this recovery faltered amid soaring freight, energy, and labour costs, exacerbated by the broader cost of living crisis.
What lies ahead for Homebase and its employees
Despite Dawson’s planned rescue, up to 34 Homebase locations remain at risk, potentially affecting 500 employees.
The fate of the company’s Milton Keynes head office, with an additional 200 to 300 staff, is similarly uncertain.
To support workers facing redundancy, Hilco and Wesfarmers have agreed to set up an employee fund worth several million pounds.
Homebase, founded in 1981 in Croydon, once operated over 250 stores.
With this restructuring, Homebase could either see a reinvigoration under The Range or face continued fragmentation if remaining sales do not proceed as planned.
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