Homebase collapses with 2,000 jobs at risk
Homebase Faces Administration, 2,000 Jobs Threatened
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BBC News Business Correspondent
Homebase has gone into administration, threatening the jobs of 2,000 employees.
The owner, Hilco, had been trying to sell the underperforming retail business but hasn't been able to find a direct buyer yet.
The owner of the home goods retailer The Range plans to acquire up to 70 stores along with the brand itself, helping to protect around 1,600 jobs.
As a result, there are still 49 stores that haven't found a buyer, putting thousands of jobs at the stores and headquarters in jeopardy. The administrators from Teneo chose not to disclose which specific stores might close at this point.
The 49 stores that are in jeopardy will keep operating as Teneo searches for a buyer, and there won't be any layoffs right away.
In addition to acquiring nearly 70 stores, CDS Superstores, the owner of the Range, has also obtained the brand name and intellectual property rights.
The Homebase brand will remain active online, while the physical stores will be rebranded as The Range.
Damian McGloughlin, the CEO of Homebase, stated that the last three years have presented significant challenges for DIY retailers.
He mentioned that a drop in consumer trust and expenditures after the pandemic, along with ongoing high inflation, global supply chain problems, and unusual weather patterns, have all contributed to the situation.
McGloughlin mentioned that the company had undergone a reorganization and attempted to secure funding, but "these attempts have not yielded positive results."
He mentioned that employees would likely find the news about the collapse to be disturbing.
Teneo joint administrator Gavin Maher expressed that "this is a particularly challenging and unpredictable period for everyone affected."
He mentioned that any organization looking to purchase the remaining stores should "reach out."
Homebase has just finished selling 11 of its stores in the UK to Sainsbury's, and the supermarket is currently working on acquiring three more locations.
In 2018, Hilco acquired Homebase for just £1 from Wesfarmers, following the Australian company's unsuccessful attempt to enter the UK market.
Wesfarmers acquired Homebase in 2016 and promptly dismissed the entire senior management group.
The company acknowledged that it made several mistakes on its own, like miscalculating the winter demand for various products, including heaters, cleaning supplies, and storage options. It also recognized that it removed some popular kitchen and bathroom lines.
After Hilco purchased Homebase, they implemented a range of cost-reduction strategies.
However, Homebase faced challenges as shoppers reduced their spending during the cost-of-living crisis, resulting in a loss of £84.2 million last year.
Matt Walton, a senior analyst at Globaldata, noted that Homebase has struggled to reclaim its market standing following its time under Wesfarmers' ownership, as it has fallen behind due to increased competition in the home goods sector.
Susannah Streeter, the head of finance and markets at Hargreaves Lansdown, noted that the home renovation industry has faced challenges as consumers are becoming more financially cautious due to increased borrowing expenses.
Even though interest rates are beginning to decrease, homeowners are being extremely careful, with some choosing to save for vacations instead of home improvement projects, she noted.
Nevertheless, when the price is reasonable, shoppers have shown a tendency to spend freely. According to her, B&M and Home Bargains have been performing well in the budget-friendly segment of the market.
Homebase was established in 1979 through a partnership between Sainsbury's and the Belgian department store chain GB-inno-BM.
Its initial location was in Croydon, and it began opening additional stores during the 1980s.
In the 1990s, Sainsbury's acquired Texas Homecare and renamed it Homebase. In the 2000s, it changed hands multiple times, first sold to Shroder Ventures, then to GUS, and finally to Home Retail Group.
