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Home improvement chain Homebase is on the verge of tumbling into administration, with thousands of
jobs and 130 shops at risk.
The troubled chain is preparing to line up administrators Teneo to handle
its insolvency after announcing a loss of £84.2 million last year.
Hilco Capital, which bought the retailer for £1 in 2018, began investigating cost-cutting measures earlier this year,
blaming overly cautious consumers not splashing out on DIY projects.
The firm’s collapse could sound the death knell for another British high street chain after
the deaths of beloved brands including BHS, Wilko and Debenhams
and others – which have been resurrected as online-only businesses.
In August, Sainsbury’s agreed to acquire 10 Homebase stores and convert them into supermarkets.
It co-founded the homeware business in the 1970s before selling it off in the
early 2000s.
Homebase looks to be heading for administration, with the
garden chain appointing insolvency experts which could mean jobs and 130 shops are at risk.
File photo
Damian McGloughlin, the managing director of Homebase, told suppliers in August
it would begin an ‘active sale process’ to seek new investment
Sainsbury’s (stock image) agreed to acquire 10 Homebase shops and convert
them into supermarkets in a deal which is anticipated to create around 1,000 new jobs
A map showing the 10 locations set to be converted into Sainsbury’s stores – an irony,
given the supermarket chain co-founded Homebase in the 1970s
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The locations set for conversion are located in Sutton Coldfield, Bromsgrove, Cromer, Derry/Londonderry, Fareham, Inverurie, Lowestoft,
Newark, Omagh and Rugby.
Damian McGloughlin, the managing director of Homebase,
told suppliers in August it would begin an ‘active sale process’ to seek new investment.
The chain is reported to be in talks with the owners of The Range and discount shop B&M
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save some stores and jobs.
Read More
Homebase to close 10 stores with major supermarket chain ready to buy them – is your local shutting?
The Range is considering swooping for 75 stores in a move that
could save 1,500 jobs, Sky News reported.
Analysts suggest Homebase may have run into trouble because of
high borrowing costs – stopping homeowners from investing in improvements to their properties.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘It’s been tough going in the home renovation market, as
consumers have tightened their belts amid high borrowing costs.
‘Even though interest rates have begun to come down, homeowners have been ultra cautious,
with bigger ticket items hard to shift.
‘Some consumers appear to have been ring-fencing spending for holidays and experiences rather than major
makeovers.’
She added that competitors such as B&M and Home Bargains – which sell much cheaper, mass-market furniture – will have cleaned up at Homebase’s expense.
Ms Streeter continued: ‘The Range appears to have found
a recipe for success with its pile ’em high, sell ’em cheaper approach to homewares, and
appears to be mulling expanding its footprint by taking a chunk of Homebase stores.
‘The future for others remains uncertain, although there
may be other takers in the “value” end of the home market,
who could swoop in with a cut-price offer.’
Homebase currently operates around 144 locations across the UK,
with its first store opening in Croydon in April 1981.
Sainsbury’s dispensed with the business in 2002.
Its most recent owners, Hilco Capital, purchased Homebase from Wesfarmers in 2018 for £1 after the Australian firm made a series of catastrophic errors – from
selling barbeques in winter to firing its entire senior management
team.
Hilco has closed 106 stores since.
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