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Struggling DIY chain Homebase has fallen into administration, blaming a downturn in home improvements for a collapse that puts 49 shops and 2,000 jobs at risk.
The retailer, which operates about 130 DIY and garden centre outlets, on Wednesday appointed insolvency practitioners at consultancy Teneo following a decline in sales over the past three years.
The administrators subsequently sold “up to 70 stores”, the Homebase brand and intellectual property to CDS Superstores, owner of homeware chain The Range, which this year bought the Wilko brand after the value chain collapsed amid a cash crunch, leading to the loss of thousands of jobs.
Although the prepack administration deal is expected to save about 1,600 jobs, the fate of 2,000 employees, including head office staff, remains uncertain as Teneo seeks a buyer for the remaining 49 UK stores.
The administrators insisted on Wednesday that there “will not be any immediate redundancies” and customers continue to receive their orders “as far as possible”.
Homebase, which was bought by restructuring specialist Hilco for £1 in 2018 after a disastrous period under the ownership of Australian group Wesfarmers, brought in consultants at Teneo this year to identify cost-saving measures.
It recorded a pre-tax loss of £85mn in the year to January 1 2023, while turnover fell to £701mn from £788mn during the period, with the company blaming “a rapid decline in consumer confidence and the cost of living crisis” for its performance.
Damian McGloughlin, chief executive of Homebase, said on Wednesday that the company had “taken many and wide-ranging actions to improve trading performance, including restructuring the business and seeking fresh investment”.
However, these efforts were unsuccessful, leading to the difficult decision to appoint administrators, he added.
Homebase in 2018 temporarily entered into a company voluntary arrangement to enable it to cut rents and close stores.
“From being the second-largest DIY and gardening retailer in 2015, Homebase’s market share had more than halved by 2021 as Hilco struggled to recover from Wesfarmers’ complete overhaul of its offer,” said Matt Walton, a senior data analyst at research firm GlobalData.
Supermarket chain J Sainsbury acquired 11 stores from Homebase in August, which it plans to convert into large supermarkets, and has agreed in principle to buy a further three, Teneo added.
