Homebase to Close 42 Stores as U.K. Retail Malaise Spreads
(Bloomberg) -- Homebase plans to close 42 of its 241 stores in the U.K. and Ireland and cut as many as 1,500 jobs as the struggling home-improvement chain seeks to shore up performance.
The retailer plans to close the stores by early 2019 under a company voluntary arrangement, according to a statement on Tuesday. The CVA is a U.K. court process sometimes used to allow insolvent firms to reach agreements with creditors.
Another casualty of the U.K.’s demanding retail sector, Homebase has suffered from a reduction in customer spending and confidence. Australian home-improvement company Wesfarmers Ltd. purchased Homebase for 340 million pounds ($434 million) in 2016, but the business lost more than 600 million pounds over two years. Restructuring company Hilco Capital LP bought the chain for a pound in May.
“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,” said Damian McGloughlin, chief executive officer of Homebase, in the statement. The company said it currently employs about 11,000 people and will try to redeploy employees within the business where possible.
CVAs are becoming a more frequent occurrence on the U.K. high street, with Homebase becoming another in a list of retailers using the process to shutter outlets. Fashion retailer New Look, baby and children’s-wear chain Mothercare Plc and floor-coverings seller Carpetright Plc have turned to CVAs as they’ve closed dozens of stores.
Turnaround specialist Alvarez & Marsal will handle the CVA and has consulted with the property owners, according to the statement. A group of landlords challenged House of Fraser Ltd. last month, after the department-store chain proposed closing half of its stores. Mike Ashley’s Sports Direct International Plc, which agreed on Friday to buy House of Fraser for 90 million pounds, said it plans to keep 80 percent of the chain’s stores open.
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