Homebase enters administration with 2,000 jobs at risk

Homebase has collapsed into administration, putting 2,000 jobs at risk.

Hilco, the owner of Homebase, had been looking to sell the struggling retailer but has not managed to find an outright buyer.

The company behind The Range retail chain is buying up to 70 stores as well as the Homebase brand, safeguarding about 1,600 jobs.

It leaves 49 shops and thousands of jobs under threat though the administrators Teneo declined to say at this stage where these stores are.

These shops will continue to trade while Teneo looks for a buyer and there will be no immediate redundancies.

Along with up to 70 stores and the Homebase name, The Range owner CDS Superstores has also bought the intellectual property.

The Homebase brand will continue online and the physical shops will become The Range stores.

Homebase's chief executive, Damian McGloughlin, said staff would find the news "unsettling".

He said the past three years had been "incredibly challenging" for DIY stores.

There had been a "decline in consumer confidence and spending following the pandemic", he said, as well as "persistent high inflation, global supply chain issues and unseasonable weather".

McGloughlin said the business had restructured and sought investment but "these efforts have not been successful".

He added that staff would find the news of the collapse "unsettling".

Teneo joint administrator Gavin Maher said "this is a very difficult and uncertain time for all involved".

He said any party with an interest in buying the remaining stores should "get in touch".

The vast majority of Homebase stores are based either in retail parks or out of town, with just five stores on High Streets and one in a shopping centre.

Homebase recently completed the sale of 11 of its UK stores to Sainsbury’s, and the supermarket is in the process of buying another three.

Hilco acquired Homebase in 2018 for £1 from Wesfarmers after a disastrous foray into the UK market for the Australian firm.

Wesfarmers had bought Homebase in 2016 and immediately sacked Homebase's senior management team.

It admitted making a number of "self-induced" blunders, such as underestimating winter demand for a range of items from heaters to cleaning and storage, and dropping popular kitchen and bathroom ranges.

After Hilco bought Homebase it brought in a number of cost-cutting measures.

But Homebase struggled as consumers cut back on spending in the cost of living crisis, and reported an £84.2m loss last year.

Matt Walton, senior analyst at Globaldata, said Homebase had been unable to regain its market position after Wesfarmers' ownership, losing ground as competition in homewares rose.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said it had been "tough going in the home renovation market as consumers have tightened their belts amid high borrowing costs".

Although interest rates have started to come down, homeowners have been "ultra-cautious", with some saving for holidays rather than DIY, she said.

However, if the price has been right, consumers have been willing to "splash the cash", with B&M and Home Bargains doing better at the "value" end of the market, she added.