Homebase 'to close a quarter of stores' in move that threatens 1,000 jobs
PUBLISHED: 15:07 08 August 2018 | UPDATED: 18:42 08 August 2018
Troubled DIY chain Homebase is set to reveal plans which will close around a quarter of its stores and threaten more than 1,000 jobs, according to reports.
Hilco Capital, which struck a deal to buy the retailer for £1 in May, is expected to outline plans early next week for a company voluntary arrangement (CVA) that will allow it to close around 60 of its 249 stores.
A CVA is an agreement that a company strikes with its creditors to reduce its debts and running costs in an attempt to keep the business operating, and has been widely used this year as retailers and dining chains including Prezzo, New Look, Byron, Toys R Us and Maplin have come under pressure.
The CVA is expected to be announced by insolvency specialists Alvarez & Marsal, Sky News reports.
Homebase has not commented on the speculation, nor the location of the stores which could be closed. In the East of England it has outlets in Bury St Edmunds, Cambridge, Cromer, Dereham, Felixstowe, Ipswich, Lowestoft, Newmarket, Norwich’s Hall Road and Sprowston.
Hilco is understood to have been working on the CVA since it bought Homebase from Australian group Wesfarmers earlier this year.
Wesfarmers had presided over one of the most disastrous corporate takeovers in recent retail history, buying Homebase for £340m in 2016 and rebranding many of its shops to Bunnings Warehouse before admitting it was out of its depth and disposing of the chain for a nominal fee two years later. The company had to write off more than £500m after ditching some of Homebase’s most popular lines.
Norwich’s Sprowston store was closed earlier this year for a rebrand and refurbishment as a Bunnings Warehouse, reopening in March. Following Wesfarmers’ withdrawal, however, it was decided it would revert to Homebase branding, and reopened under its previous name on Wednesday.
The final number of shops to be closed will include 18 which have already shut in recent months, Sky News reports, while analysts have speculated that between 1,000 and 1,500 jobs would be put at risk by the announcement.
The Homebase closure plans are just the latest blow for the retail sector in 2018, after a string of high-profile business failures.
The latest flagship name in the firing line is House of Fraser, which is battling to find new funding to stave off a collapse that could leave 17,000 staff out of work.