LONDON (Reuters) – British home improvement retailer Homebase said on Tuesday it planned to close 42 stores, putting 1,500 jobs at risk, with new owner Hilco Capital seeking to reduce its cost base in a brutal trading environment.
FILE PHOTO: A sales assistant tidies up a shelf of paint at a Homebase store in Aylesford, Britain, May 1, 2013. REUTERS/Luke MacGregor/File Photo
Hilco acquired the struggling chain from Australian group Wesfarmers for a nominal 1 pound in May.
Homebase said the proposed closures form part of a so-called Company Voluntary Arrangement (CVA) restructuring, allowing the business to avoid insolvency or administration.
A string of British store groups have either gone out of business or announced plans to close shops this year, as they struggle with subdued consumer spending, rising labour costs, higher business property taxes and growing online competition.
CVAs have been adopted by a string of British retailers including fashion chain New Look, floor coverings group Carpetright and mother-and-baby goods firm Mothercare.
“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,” it 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.”
Creditors will vote on the CVA plan on Aug. 31.
The 42 stores in Britain and Ireland are set to close during late 2018 and early 2019. Homebase currently trades from 241 stores in Britain and Ireland, employing 11,000.
Homebase said staff would be redeployed within the business where possible.
Homebase was purchased by Wesfarmers for 340 million pounds ($434 million) in 2016 but it proved a disastrous investment.
Reporting by James Davey, Editing by Paul Sandle and David Evans