Homebase owner 'planning to axe stores'
DIY chain Homebase is preparing to announce the closure of up to 60 stores next week, affecting around 1,000 workers, according to reports
The chain's owner, buyout and turnaround specialist Hilco, is expected to unveil plans to close around one in four of its 249 stores nationwide.
Hilco Capital have brought in advisers Alvarez & Marsal to look at options for the business after buying it from Australia's Wesfarmers group in May. It is understood that the plan is for a Company Voluntary Arrangement, or CVA – the rescue deal option used by a string of high street chains so far this year to close hundreds of stores and axe thousands of jobs.
According to Sky News, Alvarex & Marsal will launch the CVA proposal early next week.
Homebase has refused to comment on the reports. The chain has branches locally in Wolverhampton, Cannock, Telford, Market Drayton, Wrexham and Kidderminster, and employs around 12,000 people across the UK.
Hilco, which rescued HMV five years ago, is thought to have been working on plans to turnaround the financial fortunes of Homebase since buying it for just £1 from Wesfarmers, which paid £340m for the chain two years ago.
Wesfarmers tried to introduce Australia's Bunning DIY brand in a disastrous foray into the British retail market which resulted in it writing off £450m and launching a programme of closures earlier this year, including the branch at Whitchurch in Shropshire. That was replaced with a B&M earlier this month.
Hilco announced in June it was cutting 300 jobs at a Homebase support centre in Milton Keynes, saying it was part of its efforts to "start rebuilding Homebase's position in the UK market."
According to the latest reports, the number of stores facing the axe under the CVA is still under discussion but could be between 50 and 80, including the 18 that have already closed in recent months. Job losses could be between 1,000 and 1,500.
CVA deals allow companies to secure rent cuts and offload loss-making stores and have been used this year by Mothercare, New Look and Carpetright as well as department store chain House of Fraser. The result has been thousands of jobs lost on the high street.