Jobs at risk as Homebase heads for administration

Homebase is preparing to appoint administrators after its bank pulled the plug on a crucial refinancing deal, in a move that could threaten significant numbers of shops and jobs.
The Times has learnt that the troubled DIY and garden chain is preparing to line up Teneo to handle an insolvency process for its UK operation, which comprises roughly 130 shops.
The development comes after Wells Fargo declined to extend a lending facility of up to £95 million that was due to end in December, amid concerns over future trading.
CDS Superstores, which owns and runs The Range homeware outlets, is preparing to buy about 70 Homebase shops as part of a pre-pack administration deal.
The deal, in which shops will be folded into CDS’s shopping estate, could save about 1,600 jobs across the UK. About 1,000 frontline and head office staff are at risk of being made redundant, however, unless buyers for the remaining shops can be found.
CDS, run by Chris Dawson, nicknamed the “Del Boy billionaire”, is reported to also be in talks to acquire the 40-year-old Homebase brand and its website in a transaction worth about £30 million, according to The Telegraph.
Hilco Capital, which bought the retailer for £1 in 2018, drafted in Teneo this year to look at numerous cost-saving options after Homebase posted a loss of £84.2 million in the year to January 1, 2023, which it blamed on cautious consumer spending and increased costs.
Damian McGloughlin, the managing director of Homebase, wrote to suppliers in August to say it was trading “behind where we planned to be” and would begin an “active sale process” to seek new investment.
Homebase is understood to have held discussions with a number of parties, including B&M European Value Retail and Kingfisher, about a deal. However, no sale came to fruition.
Sainsbury’s bought ten shops from Homebase in August and said it planned to convert them into big supermarkets, marking the changing fortunes of two big British retail brands as questions are raised over the future of the DIY chain.
The collapse of Homebase would be a fresh blow to the high street, after the downfalls of Carpetright, The Body Shop, Wilko and Paperchase. Cautious household spending and increased costs led to an 11 per cent increase in the number of insolvencies of retailers last year to 1,940 according to Mazars, the professional services firm.
Homebase has had a chequered history since it was created by Sainsbury’s in 1979 and sold off by the supermarket in 2006.
Hilco Capital acquired the company after a disastrous period under Wesfarmers, its Australian owner, which had paid £340 million for the group only 18 months earlier.
Wesfarmers, which made a raft of changes to Homebase’s shops and range, was accused of underestimating the competition from the likes of B&Q and of failing to understand the differences between Australian and British retail.
In the same year it bought Homebase, Hilco launched a company voluntary arrangement, a controversial insolvency procedure, to cut rents and close hundreds of shops. Homebase ended the arrangement 18 months early after it renegotiated most of its leases and improved profitability.
Hilco first put the business up for sale in 2020 as it looked to capitalise on the pandemic boom for home improvement retailers, when people renovated their properties and diverted spending from holidays and leisure to DIY projects.
Hugh Osmond, one of Britain’s wealthiest businessmen, was understood to have been assembling a £300 million takeover bid for Homebase in 2021, under his Osmond Capital investment vehicle, according to Sky News. He was not thought to be in exclusive talks to buy the chain, although the identity of other bidders was unclear.
Homebase, Hilco and Teneo were contacted for comment.