Homebase collapses into administration with thousands of jobs at risk

The struggling DIY retailer Homebase has gone into administration, putting thousands of employees in a precarious situation. This comes even after most of its stores were acquired by the owner of The Range, a home goods store.

Gavin Park, Gavin Maher, and Adele Macleod from the financial consulting company Teneo have been named as the joint administrators for HHGL Limited and Hampden Group Limited, the companies that own Homebase.

CDS Superstores, the company that owns The Range and Wilko, has acquired 70 stores from Homebase, which helps preserve around 1,600 jobs. This purchase also includes the Homebase brand and its intellectual property.

The Homebase brand will keep operating online, and the stores acquired by CDS will remain open until the transition is complete. Once that happens, they will be transformed into The Range superstores.

Homebase recently finalized the sale of 11 of its stores in the UK to Sainsbury's and has also made agreements for the sale of three additional locations.

The fate of the remaining 49 Homebase locations and roughly 2,000 employees is uncertain. However, the administrators mentioned that they are still in discussions with potential buyers.

The managers indicated that there wouldn't be any layoffs right away as they evaluate the situation at Homebase. They also mentioned that employees would keep receiving their salaries and benefits for as long as they are employed.

The management has committed to processing customer orders as much as they can and mentioned that they will set up a system for shoppers to use their gift vouchers.

Damian McGloughlin, the CEO of Homebase, mentioned that the company has faced challenges due to the rising cost of living. Additionally, it has been dealing with ongoing inflation, issues in global supply chains, and unusual weather patterns.

"The past three years have been extremely tough for the home and garden improvement industry," he stated. "In light of this, we have implemented a variety of strategies to enhance our business performance, such as reorganizing our operations and pursuing new investments. Unfortunately, these initiatives have not yielded the desired results."

Maher stated that the managers are aiming to finalize the sale of more stores in the next few weeks. "We understand that this is a challenging and uncertain period for everyone affected. The agreement with CDS helps maintain the Homebase brand and protects a considerable number of jobs," he explained.

Homebase has been facing challenges in bringing in customers for a while now, and its parent company, HHGL, reported a loss of £85 million for the year ending in January 2023. This stands in contrast to a profit of nearly £56 million the previous year, following an 11% decline in sales.

Hilco, the current owner of Homebase and a specialist in reviving struggling businesses, has reportedly decided to put the chain up for sale again this spring. This move comes six years after Hilco acquired Homebase for just £1 from the Australian retail company Wesfarmers in 2018.

When the sale occurred, the chain operated roughly 250 locations, but it has now reduced its number to just over 130.

The Homebase brand has experienced a tumultuous journey since its establishment by Sainsbury's in 1979, eventually being sold by the supermarket in 2006.

Wesfarmers held ownership of the group for just two years, following what many consider to be one of the most unsuccessful retail acquisitions in the UK.

The Range, which has 210 locations across the UK and Ireland, acquired the Wilko brand and its related intellectual property last year. This happened when administrators were selling off various assets of the 93-year-old retailer, although they did not purchase any of its physical stores.

The Range stated that purchasing the Homebase brand would enable them to attract new customers and connect with different communities. This move is part of their parent company, CDS's, strategy to expand their store locations significantly over the next four to five years.

Alex Simpkin, the CEO of CDS, mentioned that the stores they’ve acquired will offer all the typical products found at The Range, along with a wider selection in areas like gardening, showrooms, and DIY. He emphasized that they will also preserve the valuable knowledge and history of Homebase.