Partly Cloudy

Partly Cloudy

max temp: 11°C

min temp: 9°C

Search

Update: Homebase to close around 80 stores by 2018

14:42 22 October 2014

Homebase is to cut its estate of stores by around 25% over the next four years.

Homebase is to cut its estate of stores by around 25% over the next four years.

DIY chain Homebase is to close a quarter of its stores and has ditched its boss after a review by parent company Home Retail Group found failings in its sales performance.

Home Retail, which also owns Argos, said the number of stores would fall by around 25% from 323 this year, a loss of about 80 outlets in the period up to early 2018. It is already shutting 30 in the current financial year.

A review was launched as the threat of online rivals and the rise of a generation “less skilled in DIY projects” threatened a sector already squeezed by the economic downturn over the last few years.

It found Homebase was saddled with “inconsistent store operating standards” as well as “a large estate with low sales densities that result in a challenged financial model”.

A shake-up will aim to improve product availability and presentation and instil “a culture of both efficiency and great customer service in stores” and will also see it take advantage of online technology developed by Argos.

The announcement came as the group’s half-year results showed that although sales and profits were rising at Homebase, earnings growth was lagging behind that of Argos – itself undergoing a shake-up – where they soared by 57%.

Group chief executive John Walden said Homebase would launch a three-year plan “to improve the productivity of its store estate, strengthen its propositions and accelerate digital capabilities”.

“This will position Homebase as a smaller but stronger business, ready for investment and growth,” said Mr Walden.

The group said: “Following the completion of the Homebase business review, Paul Loft, managing director of Homebase, and the group have agreed that now would be an appropriate time for Paul to step down from his role.”

Details of the store closures emerged as the group reported a 13% rise in its headline “benchmark” pre-tax profit to £30.9million for the half-year to August 30. Benchmark operating profit grew by 2% to £27.8m.

However reported pre-tax profit fell 5% to £13.5m after taking into account costs of a plan to transform Argos plus the effect on the bottom line of property provisions and currency movements.

Group sales increased by 3% to £2.67billion, with like-for-like sales up 2.9% at Argos and 4.1% at Homebase.

Argos saw sales from mobile and tablet devices rise by 45% as its benchmark operating profit soared by 57% to £12 million.

Homebase was boosted by a strong performance from seasonal products in the first quarter during the spring, while “big ticket” items such as fitted kitchens and bathrooms also did well though other categories were flat.

Mr Walden, the former Argos boss who was promoted to lead Home Retail after long-serving chief executive Terry Duddy stepped down earlier this year, said the group had performed well.

“Argos continued to build on its sales growth from the previous financial year, increased its benchmark operating profit, whilst also making good progress with its transformation plan.

“Homebase delivered a good peak trading period, performing well throughout the half despite being up against the tough comparators of a strong second quarter last year.

“At this mid-way point in our financial year, we continue to expect to deliver full-year benchmark profit before tax in line with current market expectations.

“However, as always the full-year outcome will depend upon the important Argos Christmas trading period.”

The announcement of closures spells an uncertain future for staff at Homebase, which in March employed nearly 18,000 people.

The chain includes 10 stores across Suffolk and north Essex but today’s announcement did not identify any of the sites facing closure.

Home Retail Group said affected employees would be the first to know and it would where possible redeploy them to elsewhere in the group, or ask businesses taking over its sites to find roles for them.

A spokesman said: “Home Retail Group has announced a three-year plan for Homebase to revitalise the business for the future.

“Part of the plan will be to right-size the store estate through scheduled lease expiries and a series of sales to other retailers.

“Once they are identified, our colleagues will be the first to be informed about any of the affected stores, and where possible we will redeploy colleagues to other stores within the group, or encourage retailers buying our leases to offer roles within their businesses locally.

“These changes are necessary to make Homebase a stronger business for the future.”

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other Ipswich Star visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by Ipswich Star staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique Ipswich Star account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

A disabled man from Ipswich has spoken of his heartbreak after Christmas presents he bought for his friends and family were stolen from his flat.

A drone pilot has offered a rare glimpse of Felixstowe Pier’s offshore promenade.

Water has been leaking from an underground pipe for weeks at Ipswich railway station – but there’s no agreement on who is responsible for it or on when it will be repaired.

Two teenagers were arrested in police drug raids at two addresses in Pelican Close, Ipswich, this morning.

A man arrested on suspicion of attempted murder following a shooting in Ipswich has been bailed by police.

A young girl was taken to hospital after she was knocked over by a van today.

The police hunt for missing RAF gunner Corrie McKeague has been labelled “incompetent” by his mother, as an online campaign has raised more than £15,000 to hire a private investigator.

Distraction thieves are targeting victims in Suffolk by asking for directions and then stealing their purse.

Whether it’s a Santa Claus pug or a hamster dressed as an elf, we want to see it in your Santa Paws pictures

Reminders of the past are still on many properties in Ipswich, writes David Kindred.

Most read

Most commented

HOT JOBS

Show Job Lists

Topic pages

Streetlife

Newsletter Sign Up

MyDate24 MyPhotos24