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Homebase Collapses: 2,000 Jobs at Risk as The Range Steps In to Save Part of the DIY Giant

13 November, 2024 - 8:04PM
Homebase Collapses: 2,000 Jobs at Risk as The Range Steps In to Save Part of the DIY Giant
Credit: chroniclelive.co.uk

The struggling DIY chain Homebase has collapsed into administration, leaving thousands of workers facing an uncertain future, despite the purchase of the bulk of its stores by the owner of The Range homeware retailer.

Gavin Park, Gavin Maher and Adele Macleod from the financial advisory firm Teneo were appointed as joint administrators of Homebase’s owners, HHGL Limited and Hampden Group Limited.

The owner of The Range and Wilko, CDS Superstores, has bought 70 of Homebase’s stores, saving up to 1,600 jobs, as well as the brand and intellectual property.

The Homebase brand will continue to trade online, while the stores bought by CDS will continue to trade until they are handed over, at which point they will be rebranded as The Range superstores.

Homebase had recently completed a sale of 11 of its UK stores to Sainsbury’s, and has exchanged on a further three locations.

The Future of 2,000 Jobs Remains Unclear

The future of the remaining 49 Homebase stores and about 2,000 staff is unclear, although the administrators said they were continuing talks with interested parties.

The administrators said there would not be any immediate redundancies while Homebase’s position was being assessed, adding that they would continue to pay employees’ wage and benefits while they remain in work.

The administrators have pledged to continue to fulfil customer orders as far as possible and said they would put arrangements in place to allow shoppers to use gift vouchers.

Homebase CEO: "Incredibly Challenging" Times

Damian McGloughlin, the chief executive of Homebase, said the chain had struggled during the cost of living crisis, while also facing persistently high inflation, global supply chain problems and unseasonable weather.

“It has been an incredibly challenging three years for the home and garden improvement market,” he said. “Against this backdrop, we have taken many and wide-ranging actions to improve trading performance, including restructuring the business and seeking fresh investment. These efforts have not been successful.”

Administrators Hopeful for More Sales

Maher said the the administrators hoped to complete sales of additional stores over the coming weeks. “We appreciate that this is a very difficult and uncertain time for all involved. The sale to CDS preserves the Homebase brand and secures a significant number of jobs,” he said.

Homebase has been under pressure to attract shoppers for some time, and its parent group, HHGL, made a loss of £85m in the year to January 2023, from an annual profit of nearly £56m a year earlier, after an 11% drop in sales.

A Tumultuous History for Homebase

Homebase’s current owner, the turnaround specialist Hilco, reportedly put the chain back on the market this spring, six years after it bought it for £1 from the Australian retail group Wesfarmers in 2018.

At the time of the sale, the chain had about 250 outlets, but has since shrunk to just over 130.

The Homebase chain has had a chequered history since it was created by Sainsbury’s in 1979 and sold off by the supermarket in 2006.

Wesfarmers owned the group for only two years, after what some view as one of the most disastrous UK retail takeovers.

The Range's Growing Empire

The Range, which operates 210 stores in the UK and Ireland, bought the Wilko brand and intellectual property rights last year, when administrators sold off parts of the 93-year-old retailer, but did not buy any of its stores.

The Range said the acquisition of the Homebase brand would allow it to gain new customers and reach new communities, as part of its owner, CDS’s, plan to double the size of its store estate over the next four to five years.

CDS’s group chief executive, Alex Simpkin, said the stores it had bought would “include everything you’d expect from The Range, combined with much broader choice across garden, showroom and DIY categories – retaining the best of the Homebase expertise and heritage”.

A Pre-Pack Deal for The Range

According to Sky News, Homebase is to be placed into administration later today. It is understood that The Range has agreed a pre-packaged sale of approximately 75 stores - including those in Ireland - along with the brand and the online business. Around 1,500 jobs will be saved by the deal but it is unclear what will happen regarding the remaining 1,700 roles and c. 50 stores.

The Times reports that corporate advisory firm Teneo is to handle the insolvency process. In August this year, Homebase MD Damian McGloughlin, wrote to suppliers to advise the business was “behind where we planned to be” and would begin an “active sale process” to seek new investment.

The publication also states that concerns over trading saw Wells Fargo refuse to extend a lending facility of up to £95 million that was due to end in December. Teneo, which has been running a sale process in recent months, is expected to seek buyers for nearly 50 remaining Homebase stores once it is appointed as administrator.

Homebase's Recent Financial Struggles

Homebase has struggled financially in recent years, and is said to have recorded almost £21m of losses in 2023.

The home renovation retailer has been subject to a string of ownership deals in recent years. Hilco Capital first looked for a Homebase buyer in 2020, after acquiring the company from Australian retail group Wesfarmers in May 2018 for just £1. Wesfarmers bought the chain from Home Retail Group for £340 million in 2016.

The Telegraph reports that in August of this year, Homebase’s MD Damian McGloughlin, contacted suppliers to inform them that the business was falling behind in the business leaders’ expectations, saying that the company would begin an “active sale process” to seek investment.

The Range's Expansion Continues

In August 2023, The Range stepped in to buy failing high street retailer Wilko. Although it had entered administration and closed 400 of its stores, Wilko returned as an ecommerce retailer in October 2023, with physical stores beginning to open shortly after.

Following The Range’s rescue of Wilko, the retailer also announced it had created its first-ever kitchen range, marking the brand’s first steps into the KBB market.

The Range owner Chris Dawson – who is affectionately nicknamed “the Del Boy Billionaire” due to his Rolls-Royce with a license plate reading “DE11 BOY” – opened the first Range store in 1989.

A Chapter Closes for Homebase

The collapse of Homebase marks the end of an era for the once-popular DIY retailer. It is a stark reminder of the challenges facing the retail sector in the face of rising inflation, a cost-of-living crisis, and changing consumer habits. While The Range's acquisition of a significant portion of the business offers a lifeline to some employees, the future of the remaining stores and workers remains uncertain. It remains to be seen whether The Range can successfully integrate the Homebase brand and stores into its own operations, and whether it can replicate the success it has achieved with its own brand in the increasingly competitive homeware market.

This article uses information from the following sources:

Homebase Collapses: 2,000 Jobs at Risk as The Range Steps In to Save Part of the DIY Giant
Credit: mirror.co.uk
Tags:
Homebase The Range DIY
Makoto Yamada
Makoto Yamada

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Covering business news with a keen eye for detail.