Homebase on the brink: 11,000 jobs at risk as sales plunge 10% with 70% of stores now in the red
Homebase has launched a desperate turnaround plan after almost three-quarters of its stores plunged into the red.
Bosses at the ailing home improvement chain want to bring back axed concessions such as Laura Ashley and Habitat and even introduce new ones such as Carpetright and Pets Corner.
With it fighting for survival, one source close to management said: ‘The turnaround plan will focus on going back to doing what Homebase did best, selling home and garden products and not nine-foot pneumatic drills.’
Threat: Homebase bosses want to bring back axed concessions such as Laura Ashley and Habitat and even introduce new ones such as Carpetright and Pets Corner
A new range of wooden furniture went on sale this week and is understood to have proved popular with customers.
A disastrous takeover by Australian group Wesfarmers two years ago has left Homebase on the brink of collapse, putting 11,000 jobs at risk.
It was bought by HMV-owner Hilco for £1 in June but still has £116million of debt.
More than 70 per cent of stores are loss-making, with sales down 10 per cent across the business in the year to June.
Homebase has lost £300million since Wesfarmers bought it for £340million. Before the takeover, its earnings were £20million to £40million a year.
Documents seen by the Mail lay the blame for Homebase’s demise firmly at the door of Wesfarmers.
Boots shop card ploy
Boots hopes to cash in on the chaos at House of Fraser by offering the department store chain’s customers loyalty card points.
The health and beauty retailer said it will add 250 points, worth £2.50, to its Advantage Cards if customers go in store and show a House of Fraser loyalty or gift card.
House of Fraser’s new owner Sports Direct is trying to strike deals with landlords so it can keep the majority of its 59 stores open.
The chain collapsed with nearly £1billion of debts before it was rescued by Sports Direct owner Mike Ashley.
The document’s authors accused the Australian group of stripping out popular ranges, scrapping Homebase’s website and replacing existing management with a team with no experience of the UK market.
The bungled takeover saw Wesfarmers convert numerous Homebase stores to the Australian group’s Bunnings brand, alienating loyal customers.
It axed items such as wallpaper and soft furnishings and swapped them for £500 olive trees and Jacuzzis. Homebase has already closed 16 shops over the past year following the botched buy-out, which has led to hundreds of job losses.
Hilco plans to push through a restructuring plan called a company voluntary arrangement, allowing it to shut 42 of its least profitable stores and get rent reductions of up to 90 per cent on 70 more.
Creditors have been urged to vote in favour of the restructuring deal to save Homebase from collapse. But some creditors have already hinted that they are planning to oppose the CVA which will be subject to a vote at a meeting on Friday.
One said the company was likely to go bust anyway. The source said: ‘I don’t see why people who’ve done right by the company should lose out purely because of mismanagement and a lack of commercial nous.’
However, some creditors are more confident Hilco will lead a successful turnaround considering its track record with HMV.
It managed to keep the music-and-video retailer open and save more than 2,300 jobs. ‘Nobody expected that business to remain alive,’ one creditor said.
Hilco and Homebase declined to comment.