Homebase Collapse Puts 2,000 Jobs at Risk as It Enters Administration

Homebase has gone into administration, putting 2,000 jobs at risk. The struggling homeware retailer, owned by Hilco, had been actively seeking a buyer but was unable to finalize a sale. In a bid to salvage some of the business, CDS Superstores, which owns The Range, has agreed to purchase up to 70 Homebase stores along with its brand, protecting approximately 1,600 jobs.

However, 49 Homebase stores remain without a buyer, leaving thousands of employees uncertain about their future. The administrators, Teneo, have not yet disclosed which stores may close, but they have confirmed that these stores will continue trading while a buyer is sought. There will be no immediate redundancies, Teneo added.

In addition to the stores, CDS Superstores has also acquired Homebase's brand and intellectual property. As part of the deal, Homebase's physical locations will be rebranded as The Range, although the Homebase brand will continue to operate online.

Homebase CEO Damian McGloughlin commented on the company’s difficulties, acknowledging that the past three years have been especially tough for the DIY sector. He cited factors such as reduced consumer confidence, high inflation, global supply chain issues, and poor weather conditions as contributing to the company's struggles. McGloughlin also mentioned that the business had tried restructuring and seeking investment, but these efforts had not been enough to turn things around.

Teneo's joint administrator, Gavin Maher, described the situation as “very difficult and uncertain for all involved” and encouraged anyone interested in purchasing the remaining stores to come forward.

In recent months, Homebase has made efforts to offload some of its UK stores. It completed the sale of 11 stores to Sainsbury’s and is in the process of selling three more.

Homebase was originally bought by Hilco in 2018 for just £1 after Australian retailer Wesfarmers’ disastrous attempt to run the business. When Wesfarmers acquired Homebase in 2016, it made significant changes, including firing senior management and misjudging customer demand, leading to a string of mistakes that ultimately harmed the brand.

Since then, Hilco has implemented various cost-cutting measures, but the company has struggled to recover. Homebase reported an £84.2 million loss last year, as it continued to grapple with the financial impact of the cost-of-living crisis and declining consumer spending.

Market analysts have noted that Homebase lost its competitive edge following its change of ownership and failed to regain market share. Matt Walton, a senior analyst at Globaldata, said the brand has struggled to compete as other retailers, such as B&M and Home Bargains, have done better by offering lower prices in the homeware sector.

According to Susannah Streeter, head of money and markets at Hargreaves Lansdown, consumers have been more cautious about home renovation projects, as high borrowing costs and economic uncertainty have prompted people to cut back on discretionary spending. While interest rates are starting to fall, homeowners are remaining cautious, with some opting to save for holidays rather than spend on DIY projects.

The History of Homebase

Founded in 1979 by Sainsbury’s and Belgian retailer GB-inno-BM, Homebase opened its first store in Croydon. The brand expanded rapidly throughout the 1980s. In the 1990s, Sainsbury’s acquired Texas Homecare and rebranded it as Homebase. The company went through several ownership changes over the years, including sales to Shroder Ventures, GUS, and Home Retail Group, before being acquired by Wesfarmers and later Hilco.

Now, with Homebase’s future uncertain, many are left wondering how the home improvement sector will look in the coming years as a result of this dramatic shift.