Homebase is set to launch a Company Voluntary Arrangement (CVA) and is seeking approval from creditors on a proposed plan to reduce its cost base in the UK and the Republic of Ireland.
Homebase’s sales performance and profitability declined significantly under the previous ownership over the last two years, say the company.
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.
Damian McGloughlin, 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.”
After a comprehensive review, Homebase has concluded that its current store portfolio mix is no longer viable. Rental costs associated with stores are unsustainable and many stores are loss making.
A statment from Homebase said: "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 receive a better outcome than any other likely alternative.
"It is anticipated that 42 stores will close during late 2018 and early 2019."
The proposed changes to the store portfolio will regrettably mean redundancies from those stores earmarked for closure.
The process is expected to lead to a reduction of up to 1,500 roles, although every effort will be made to redeploy team members within the business where possible.
All stores in the UK and the Republic of Ireland will remain open for business as usual and this process will have no impact on customer purchases, outstanding orders or any product or service guarantees.
The creditors will vote on the CVA on 31 August 2018.
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.”
Full list of the stores to close below:
1. Aberdeen Bridge of Don
2. Aberdeen Portlethen
4. Bedford St Johns
9. Cardiff Newport Road
10. Croydon Purley Way
12. Dublin Fonthill
13. Dublin Naas Road
15. East Kilbride
24. London Merton
25. London New Southgate
26. London Wimbledon
28. Oxford Botley Road
31. Poole Tower Park
34. Seven Kings
36. Southampton Hedge End
39. Swindon Drakes Way
40. Swindon Orbital