Reason Homebase to close 42 stores, putting 1,500 jobs at risk

DIY retailer Homebase is set to close 42 stores, putting around 1,500 jobs at risk The retailer is closing the stores via a Company Voluntary Agreement (CVA), a controversial insolvency procedure used by struggling firms to shut under-performing shops Homebase said it anticipated the outlets would close from later this year into 2019 Until then, "all stores in the UK and the Republic of Ireland will remain open for business as usual and this process will have no impact on customer purchases, outstanding orders or any product or service guarantees" It said a "comprehensive review" had 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 procedure would allow the business to make essential changes to its store portfolio and reduce costs Homebase said the proposed changes would "regrettably mean redundancies"."The process is expected to lead to a reduction of up to 1,500 roles, although every effort will be made to redeploy team members within the business where possible," the retailer said Chief executive Damian McGloughlin said: "Launching a CVA has been a difficult decision and one that we have not taken lightly "Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs "The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead " The mechanism has been deployed by retailers including Carpetright, Mothercare and New Look this year Restructuring experts at Alvarez & Marsal, the professional services firm, will carry out the CVA, which will require the support of landlords Creditors will vote on the CVA on 31 August.A total of 18 Homebase stores have already been shut this year and the business has also axed 303 jobs at its head office in Milton Keynes Sky News reported last week that the company was exploring store closures through the procedure Hilco Capital, which struck a deal to buy the DIY chain for £1 in May, has been working on the CVA since buying Homebase from Wesfarmers, the Australian group which paid £340m for it Prior to the Hilco takeover, Homebase had 250 stores at its peak and 12,000 staff DIY retailer Homebase has announced plans to close 42 stores, putting up to 1,500 jobs at risk Restructuring company Hilco, which bought the DIY chain for £1 in May, confirmed it was planning a Company Voluntary Arrangement (CVA) It bought the struggling chain from Australia's Wesfarmers after its disastrous foray into the UK market The firm, which has 241 stores, said the affected outlets would be shut over the next 16 months Damian McGloughlin, chief executive of Homebase, said: "[This] has been a difficult decision and one that we have not taken lightly "Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs ".See the list of stores closing here.A total of 17 Homebase stores have already closed this year and the business has also cut 303 jobs at its head office in Milton Keynes A CVA is a controversial insolvency procedure used by struggling firms to close underperforming shops Restructuring experts at Alvarez & Marsal will carry out the CVA, which will require the support of landlords Property owners are left out of pocket by CVAs, although the British Property Federation (BPF) said that in this instance, Alvarez & Marsal and Homebase had consulted with the landlords Staff concerns.CVAs have been adopted by a number of retailers including New Look, Carpetright and Mothercare in recent months Stephanie Pollitt, assistant director of real estate policy at the BPF, said: "These situations are never easy, as property owners need to take into consideration the impact on their investors, including those protecting pensioners' savings, as they vote on the CVA proposal "Ultimately, it will be for individual property owners to decide how they will vote on the CVA, but the proposal has sought to find a solution that provides a sustainable future for Homebase ".Dave Gill of Usdaw, a union representing Homebase staff, said he was seeking urgent clarification from Hilco about its plans for the business "All too often, staff are excluded from the CVA process as the future of their jobs are being decided," he said "It is crucial that the company listens to the staff and invests in their experience and expertise to turn the business around and again make it a success ".Business blunders.Wesfarmers bought Homebase in 2016 for £340m and planned to rebrand the chain with its Bunnings brand However, the Australian company admitted making a number of "self-induced" blunders, including underestimating winter demand for items such as heaters, as well as dropping popular kitchen and bathroom ranges Catherine Shuttleworth of retail consultancy Savvy said Homebase was a business "under attack from all sides", with alienated customers finding "good alternatives in B&M, supermarkets' own home sections, Wilko and others" She added: "This will go down in retail history as an example of needing to know the market - retailing is not necessarily globally portable Chucking out the management was an ill-advised decision.".DIY retailer Homebase has announced plans to close 42 stores, putting up to 1,500 jobs at risk Restructuring company Hilco, which bought the DIY chain for £1 in May, confirmed it was planning a Company Voluntary Arrangement (CVA) It bought the struggling chain from Australia's Wesfarmers after its disastrous foray into the UK market The firm, which has 241 stores, said the affected outlets would be shut over the next 16 months Damian McGloughlin, chief executive of Homebase, said: "[This] has been a difficult decision and one that we have not taken lightly "Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs ".See the list of stores closing here.A total of 17 Homebase stores have already closed this year and the business has also cut 303 jobs at its head office in Milton Keynes A CVA is a controversial insolvency procedure used by struggling firms to close underperforming shops Restructuring experts at Alvarez & Marsal will carry out the CVA, which will require the support of landlords Property owners are left out of pocket by CVAs, although the British Property Federation (BPF) said that in this instance, Alvarez & Marsal and Homebase had consulted with the landlords Staff concerns.CVAs have been adopted by a number of retailers including New Look, Carpetright and Mothercare in recent months Stephanie Pollitt, assistant director of real estate policy at the BPF, said: "These situations are never easy, as property owners need to take into consideration the impact on their investors, including those protecting pensioners' savings, as they vote on the CVA proposal "Ultimately, it will be for individual property owners to decide how they will vote on the CVA, but the proposal has sought to find a solution that provides a sustainable future for Homebase ".Dave Gill of Usdaw, a union representing Homebase staff, said he was seeking urgent clarification from Hilco about its plans for the business "All too often, staff are excluded from the CVA process as the future of their jobs are being decided," he said "It is crucial that the company listens to the staff and invests in their experience and expertise to turn the business around and again make it a success ".Business blunders.Wesfarmers bought Homebase in 2016 for £340m and planned to rebrand the chain with its Bunnings brand However, the Australian company admitted making a number of "self-induced" blunders, including underestimating winter demand for items such as heaters, as well as dropping popular kitchen and bathroom ranges Catherine Shuttleworth of retail consultancy Savvy said Homebase was a business "under attack from all sides", with alienated customers finding "good alternatives in B&M, supermarkets' own home sections, Wilko and others" She added: "This will go down in retail history as an example of needing to know the market - retailing is not necessarily globally portable Chucking out the management was an ill-advised decision.".Wesfarmers bought Homebase in 2016 for £340m and planned to rebrand the chain with its Bunnings brand However, the Australian company admitted making a number of "self-induced" blunders, including underestimating winter demand for items such as heaters, as well as dropping popular kitchen and bathroom ranges Catherine Shuttleworth of retail consultancy Savvy said Homebase was a business "under attack from all sides", with alienated customers finding "good alternatives in B&M, supermarkets' own home sections, Wilko and others" She added: "This will go down in retail history as an example of needing to know the market - retailing is not necessarily globally portable