The Homebase store in Bath is to stay open, following the announcement of a proposal that will see 42 of the chain’s locations close as part of a restructuring plan by new owners.
The Homebase store in Bath | © Google 2018
DIY chain Homebase, which was bought by restructuring company Hilco for £1 in May, is undergoing a major overhaul in a bid to secure the company’s future.
Homebase yesterday announced the launch of a Company Voluntary Arrangement (CVA) and is seeking approval from their creditors on a proposed plan to reduce its cost base in the UK and the Republic of Ireland.
A statement from the company said: “Homebase’s sales performance and profitability declined significantly under the previous ownership over the last two years.
“In addition, the company has faced an extremely challenging retail trading environment reflecting weak consumer confidence and reduced consumer spending.
“These factors have had a significant adverse impact on Homebase’s trading position.”
After a comprehensive review, Homebase has concluded that its current store portfolio is no longer viable, the rental costs associated with stores are unsustainable and many stores are loss making.
The CVA enables Homebase to make essential changes to its store portfolio, reducing its cost base and providing a stable platform on which to continue its turnaround.
Under the terms of the CVA proposal, all creditors will receive a better outcome than any other likely alternative.
It is anticipated that 42 stores will close during late 2018 and early 2019 (a full list has been provided below).
The proposed changes to the store portfolio will mean redundancies from those stores earmarked for closure. The process is expected to lead to a reduction of up to 1,500 roles, although efforts will be made to redeploy team members within the company where possible.
All stores in the UK and the Republic of Ireland are expected to remain open for business as usual and the CVA process will have no impact on customer purchases, outstanding orders or any product or service guarantees.
The creditors will vote on the CVA proposals on 31st August 2018.
Damian McGloughlin, the CEO of Homebase, said: “Launching a CVA has been a difficult decision and one that we have not taken lightly.
“Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs.
“The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead.”
Stephanie Pollitt, Assistant Director of Real Estate Policy, British Property Federation (BPF), said: “These situations are never easy as property owners need to take into consideration the impact on their investors, including those protecting their investors’ pensioners’ savings, as they vote on the CVA proposal.
“Homebase and Alvarez & Marsal have, however, demonstrated best practice, engaging with the BPF in the process and therefore ensuring property owners’ interests have been properly taken into account.
“Ultimately, it will be for individual property owners to decide how they will vote on the CVA, but the proposal has sought to find a solution that provides a sustainable future for Homebase.”
The 42 stores earmarked for closure across the UK and Republic of Ireland include:
- Aberdeen Bridge of Don
- Aberdeen Portlethen
- Aylesbury
- Bedford St Johns
- Bradford
- Brentford
- Bristol
- Canterbury
- Cardiff Newport Road
- Croydon Purley Way
- Droitwich
- Dublin Fonthill
- Dublin Naas Road
- Dundee
- East Kilbride
- Exeter
- Gateshead
- Grantham
- Greenock
- Hawick
- Inverness
- Ipswich
- Limerick
- London Merton
- London New Southgate
- London Wimbledon
- Macclesfield
- Oxford Botley Road
- Peterborough
- Pollokshaws
- Poole Tower Park
- Robroyston
- Salisbury
- Seven Kings
- Solihull
- Southampton Hedge End
- Southend
- Stirling
- Swindon Drakes Way
- Swindon Orbital
- Warrington
- Whitby
