UK-based DIY retailer Homebase narrowed its losses in the second half of 2018 as a turnaround plan under new owners starts to show signs of progress.
The DIY and garden centre retailer shut 47 outlets last year as part of a restructuring programme after it was purchased by Hilco for £1 following a disastrous spell under the ownership of Wesfarmers.
The firm said that its turnaround is on track and the group has made significant progress, after cutting costs by £100 million. Operating losses improved by 79.1% to £39.1 million in the half-year to December 30 2018, which compares to a £187.3 million loss in the same period of 2017.
Costs were heavily reduced through a restructure of its head office, where roles were cut by 38%, alongside a CVA, which allowed Homebase to close loss-making stores and secured rent-reductions for a further 70 sites.
It also closed two of its six distribution centres, and secured a £95 million lending facility from Wells Fargo. However, sales slipped 3.5% to £497.8 million, from £515.6 million in the same period the previous year.
During the half-year, the retailer reintroduced popular ranges such as furniture, brought back in-store concessions and laid the foundations to rebuild its digital offer, Homebase said.
Positive momentum from the changes has continued into the current year and the business is now well placed for the key spring and summer trading period, it added.
Damian McGloughlin, Homebase chief executive, said: “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. 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.”
RPA Perspective UK-based DIY retailer Homebase, which was haemorrhaging money a year ago, looks as though it is on the road to recovery under new ownership.
Hilco purchased the company in June 2018 for £1 from Australian group Wesfarmers, whose attempts to import its Bunnings home improvement brand to the UK by converting Homebase stores to its Bunnings format failed dramatically. Wesfarmers had bought the chain for £340 million in 2016.
Since then, fresh management has overseen an urgent restructuring aimed at restoring the chain to profitability and today, in the first formal update, Homebase said it has delivered a “much stronger performance”, partly by implementing “difficult but necessary” cost cutting measures.
The retailer has also secured a £95million loan to help boost its financial position and get it back on track.
As part of an ongoing turnaround plan, chief executive Damian McGloughlin is endeavouring to “bring back the ranges Homebase was famous for”, such as kitchens, soft furnishings and more decorative items, which were culled during Bunnings' custodianship.
Earlier this year McGloughlin said he had the audacious goal of putting Homebase back in the black by the end of 2019. The DIY boss reaffirmed that commitment, claiming that if the three-month peak season all goes to plan, the retailer will 'at least' break even this year.
