Homebase owner plans to close 60 stores

Blog CVA Insolvency

The new owners of Homebase are set to reveal plans to close up to 60 stores next week putting over 1,000 jobs at risk.

Homebase currently has around 250 stores and 11,500 employees and has already announced the loss of 300 jobs at its Milton Keynes head office earlier this summer.

The company is set to investigate plans for a rescue deal next week, according to reports, with Homebase expected to file a company voluntary arrangement (CVA), a form of insolvency that enables a retailer to exit or alter deals with landlords.

A number of other UK retailers have used CVAs recently, as a step short of going into administration, including House of Fraser, Mothercare, New Look and Carpetright.

Homebase was sold by Australian firm Wesfarmers in May for just £1 following a disastrous push on the UK market, only two years after purchasing it for £350 million.

The original plan was to redevelop the Homebase stores under its Bunnings brand.

The Australian firm has admitted to making a number of self-induced errors, including underestimating winter demand for items such as heaters, as well as dropping popular kitchen and bathroom ranges.

On top of Wesfarmers’ catalogue of errors, Homebase has been battling to survive in a tough DIY sector hit by a slowdown in the housing market and a squeeze on consumer spending.

These factors led to Wesfarmers saying earlier in the year that they were considering closing up to 40 UK stores, with heavy losses expected.

Managing director Rob Scott said at the time that disposing of the UK chain was in the best interests of shareholders, following a review of the business.