Up to 40 outlets of DIY chain and Bunnings stores at risk as owner blames restructuring

Up to 40 Homebase and Bunnings DIY stores could be closed, putting hundreds of jobs at risk, after the group’s Australian owner said it was reviewing the future of its UK business.

The closures raised speculation that Wesfarmers, which bought Homebase for £340m two years ago, would be forced into exiting the UK after a botched takeover by its own admission.

Rob Scott, Wesfarmers’ managing director, said the 250-store UK business was expected to make an underlying loss of £97m in the half year after a £54m loss in the year to June 2017. The Australian group is taking a £584m writedown on the business, most of which relates to the value of the Homebase brand.



Scott said its performance had been below expectations, which was “obviously disappointing”. He said the problems were “through our own doing” as the company had ditched popular ranges such as kitchens and bathrooms and ousted concessions such as Laura Ashley, Habitat and Argos without having alternatives in place.

Scott said the “pace and nature of change had not been well received by Homebase customers”. Getting rid of the existing British management team also led to a loss of insight that had affected performance, he added.

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He said between 20 and 40 stores in the UK could close as the group tried to move out of Homebase outlets which did not justify the investment needed to turn them into Bunnings stores. The company, which has so far converted 19 Homebase outlets into Bunnings stores, said it would reveal further details of its review in June.

Wesfarmers had intended to spend £500m on giving the Homebase chain a facelift, turning it into a British version of its successful Australian DIY chain Bunnings, which is famous for low prices and sausage sizzles.

Michael Schneider, Bunnings group’s managing director, said: “It is clear that a significant amount of change has been driven through Homebase since the acquisition, and the disruption caused by the rapid repositioning of the business has contributed to greater than expected losses across the Homebase network.”

The total writedown includes a £40m charge against the cost of store closures and £37m relating to “excess, unsuitable and display stock”.

“It appears that Wesfarmers’ ill-considered policies have backed it into an untenable corner,” said Thomas Brereton, a retail analyst at GlobalData. “These depressing figures show that Wesfarmers must consider all opportunities to lessen its exposure to the fraught UK market.”

Facebook Twitter Pinterest A Bunnings DIY store opening in St Albans, Hertfordshire. Photograph: Bunnings

Damian McGloughlin, a former B&Q executive, is to become managing director of Bunnings’ UK business, taking over from PJ Davis who is retiring after going on extended leave last month.

News of Homebase’s difficulties bolstered shares in rival Kingfisher, which owns B&Q, sending them 1.5% higher.