Up to 40 Homebase and Bunnings DIY stores could be closed, putting hundreds of jobs at risk, after the group’s Australian owner said it was reviewing the future of its UK business.
Wesfarmers bought Homebase for £340m less than a year ago but, by its own admission, has botched the takeover.
Wesfarmers managing director Rob Scott said the UK business was expected to make an underlying loss of £97m in the half year. The Australian group is taking a £584m writedown on the business, most of which relates to the value of the Homebase brand.
Its performance had been “below expectations which is obviously disappointing”, Scott said. He admitted the problems were “through our own doing” as it had ditched popular ranges such as kitchens and bathrooms and ousted concessions such as Laura Ashley, Habitat and Argos without having alternatives in place.
Scott said the “pace and nature of change had not been well received by Homebase customers” while getting rid of the existing British management team had led to a loss of insight that had affected performance.
He said between 20 and 40 stores in the UK could close as the group tried to move out of Homebase outlets which did not justify the investment needed to turn them into Bunnings stores. The company said it would reveal further details of its review in June.
Bunnings group managing director, Michael Schneider, added: “It is clear that a significant amount of change has been driven through Homebase since the acquisition and the disruption caused by the rapid repositioning of the business has contributed to greater than expected losses across the Homebase network.”
The total writedown includes a £40m charge against the cost of store closures and £37m relating to “excess, unsuitable and display stock”.
Damian McGloughlin, a former B&Q executive, is to take over as managing director of Bunnings UK business taking over from Peter J (PJ) Davis who is retiring after going on extended leave last month.
News of Homebase’s difficulties boosted shares in rival Kingfisher, which owns B&Q, sending them 1.5% higher.