Homebase stores in the North West have been earmarked for potential closure as part of the retailer’s restructuring plan.
Two of the region’s branches are among 42 shops across the UK and the Republic of Ireland that are anticipated to close during late 2018 and early 2019.
Stores in Macclesfield and Warrington are included in the list as Homebase has concluded that its current store portfolio mix is ‘no longer viable’ due to unsustainable rental costs and many branches making losses.
Restructuring company Hilco purchased the DIY chain in for £1 in May from Australia’s Wesfarmers.
Homebase says it has seen sales performance and profitability decline under its previous owner over the last two years, whilst also facing an ‘extremely challenging retail trading environment reflecting weak consumer confidence and reduced consumer spending’.
The retailer is to launch a Company Voluntary Arrangement (CVA) and is seeking approval from creditors on its proposals to reduce its cost base in the UK and the Republic of Ireland, with a vote due to take place on 31 August.
Under the terms of the CVA proposal, all creditors are said to receive a better outcome than any other likely alternative.
Damian McGloughlin, CEO of Homebase, says: “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.”
Up to 1,500 jobs could be cut through the restructuring plans, although the firm plans to redeploy team members within the business where possible.
Alvares & Marsal is set to carry out the CVA, and Stephanie Pollitt, assistant director of real estate policy at the British Property Federation (BPF), says: “These situations are never easy as property owners need to take into consideration the impact on their investors, including those protecting their investors’ pensioners’ savings, as they vote on the CVA proposal.
“Homebase and Alvarez & Marsal have, however, demonstrated best practice, engaging with the BPF in the process and therefore ensuring property owners’ interests have been properly taken into account.
“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.”
Homebase operates a total of 241 stores across the UK and the Republic of Ireland, with other North West branches located in Upton, Altrincham, Formby and Morecambe.