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Homebase accelerates store closure plan to make it more attractive to new buyer

Homebase has accelerated its programme to close unprofitable shops amid mounting speculation that it may sell the business.

Hundreds of staff at individual stores have been put on notice of redundancy and many more may lose their jobs over the coming weeks.

The Mail on Sunday has identified about 25 stores that have shut recently or are expected to in the coming weeks.

The plan is part of a wider strategy for the chain that will mean fewer stores and a stronger online service.

We reported last month that Homebase’s parent Home Retail Group was considering a plan to spin off its £1.5billion-turnover Homebase so it can concentrate on its Argos chain. Home Retail declined to comment.

A slimmed-down property portfolio would make the chain more attractive to potential bidders, which are sizing up whether or not they want to make an offer.

Home Retail told investors in October 2012 that it planned to close 40 stores over five years.
The acceleration over recent months means that figure could be reached in just two years, as incoming Home Retail chief executive John Walden and Homebase managing director Paul Loft seek to tackle the performance of the chain in an increasingly competitive market.

The increased strategic focus from executives has already seen the Homebase business almost double its operating profit to £18million. But that does not include group costs such as funding the head office.

When deducted, this means Homebase contributes just a fraction of group profits compared with Argos.

One property source said: ‘There is no list of stores being circulated that we have seen, but the door is very much open to other retailers, such as The Range, B&M and Next, or developers who can make them a reasonable offer for a poorly performing store.’

Stores affected include those that are nearing the end of their lease, losing money or that overlap with nearby Homebase stores. Stockport closed on Friday and Grimsby, Plymouth, Stratford-upon-Avon and Sunderland are among those closing next month.

Homebase is expected to be trading from fewer than 300 stores by Christmas.

Source : Neil Craven - Mail On Sunday

24 August 2014

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