Homebase has entered administration, with The Range and CDS Superstores acquiring assets.
- Homebase’s troubles began with Wesfarmers’ ownership, ultimately selling to Hilco.
- The company couldn’t leverage the DIY boom from 2020 to 2022, leading to decreased market share.
- Economic challenges, including high inflation and supply chain issues, intensified Homebase’s struggles.
- The Range plans to revive the business with a broader offering, transitioning some stores.
Homebase entered administration with Teneo appointed and immediately transferred assets to The Range and CDS Superstores. This move questions future operations after long-standing difficulties, initiated by its acquisition by Wesfarmers in 2016. Wesfarmers intended to expand Bunnings into the UK but exited quickly, resulting in a £1 sale to Hilco. This acquisition was considered by experts, like Matt Walton from GlobalData, as the root of Homebase’s ongoing issues.
Wesfarmers’ approach involved a radical shift from Homebase’s established soft furnishings to a focus on power tools, which misaligned with its market identity. Hilco attempted to steer Homebase back to profitability by closing a third of its stores, but despite initial success under CEO Damian McGloughlin, Homebase couldn’t maintain momentum. By the end of 2019, it recorded a small profit, yet failed to capitalize on the surge in home improvement activities during the pandemic, losing significant market share.
Once the second largest in the UK DIY and gardening sector, Homebase’s share halved by 2021. Walton highlights that despite economic conditions pushing consumers towards home projects, Homebase suffered from poor communication and intensified competition from B&Q and Wickes. B&Q’s 2022 marketplace launch further diverted Homebase’s potential customer base by offering a more diverse product range.
Facing mounting losses, highlighted by a swing from a £30m profit to an £84m loss in recent years, Homebase struggled amid challenging market conditions. McGloughlin pointed out the impact of fluctuating consumer confidence compounded by inflation and global supply chain problems, stating, ‘An incredibly challenging three years for the home and garden improvement market.’
Efforts to turn the tide included store sales to Sainsbury’s and attempts to attract investors, none of which proved fruitful. Now, with The Range’s acquisition, CEO Alex Simpkin assures continued online operations while planning to repurpose acquired locations for a broader product array. Simpkin plans to integrate Homebase’s expertise into The Range’s offerings, promising to maintain its heritage.
However, experts like Walton predict challenges in reviving Homebase’s brand which has diminished significantly. Future efforts may be hindered by the brand’s reduced market presence and the distinct difference between The Range’s and Homebase’s product focuses. Amid these strategic shifts, efforts are being made to find buyers for the remaining Homebase locations, hoping to preserve as many jobs as possible.
Homebase’s journey through administration reflects significant challenges faced by retailers adapting to market shifts and economic conditions.
