Interim results from Homebase, the ailing DIY chain which was bought by restructuring firm Hilco from Australia’s Wesfarmers for £1 last May, suggest the business is on the road to recovery.
Over the 26 weeks to 30 December 2018, EBITDA losses were reduced from £172.3m to £33m, helped by a £100m reduction in costs and 22% improvement in gross profit. The cost reduction came from cuts in head office staff and the closure of 42 underperforming stores as part of a CVA plan implemented last year to save the business from administration.
Turnover from the remaining 200 Homebase stores was down 3.5% to £497m. However, like-for-like sales were said to be positive as the group’s new owners and management team pushed ahead with plans to revive the chain. This has included bringing back traditional Homebase ranges which disappeared under Wesfarmers’ plan to transform the estate to its Bunnings format. Homebase has also worked to improve customer service and product availability.
Chief Executive Damian McGloughlin said: “After the change in ownership last year, we put a clear plan in place to restructure the business, with a focus on cost management, better shop keeping and bringing back the things our team and customers love most about Homebase.
“The benefits of the changes we have made are starting to come through and I am extremely grateful for the loyalty, energy and support we have received from our team members and suppliers. It is their hard work that has enabled us to put in place these stronger foundations.”
He added: “Clearly, we are only 10-months into a three-year turnaround plan. Homebase remains one of the most recognisable retailers in the UK and Ireland, and the progress we have made in reinvigorating our customer experience means we are very optimistic about the future.”
NAM Implications:
- Given its track record, sufficient brand equity may remain for invigoration…
- Owners:
- Sainsbury’s (1979–2000)
- Schroder Ventures (2000–2002)
- GUS plc (2002–2006)
- Home Retail Group (2006–2016)
- Wesfarmers (2016–2018)
- Hilco (2018–present)
- Therefore, worth another go by NAMs…for a retailer eager to revive itself…
