Wesfarmers could close up to 40 Homebase stores

Following Wesfarmers shock announcement to the Australian Stock Exchange earlier today, it's now understood that as many as 40 Homebase stores could be closed, impacting on up to 2,000 employees in the UK and Ireland.

Read - Wesfarmers admit Homebase disaster and prepares way for possible UK&I exit

After a disappointing performance by both the 230 remaining Homebase stores and at least half of the newly converted Bunnings Warehouses, the Australian company has put the entire acquisition under review, until it's Strategy Briefing Day in June.

The poor performance highlighting at the Q1 results briefing in November, when like for like sales at the UK & Irish business declined 12% has worsened since then and the company expects to announce half year losses if around £97m when it briefs the stock-market on 21st February. These losses could escalate to anywhere between £125m and £175m by their full year end in August.

Read - It's going to get worse, before it gets better

Wesfarmers confirmed that it had written down the value of the Homebase chain by £454m as a result of its poor trading and CEO Rob Scott said "The Homebase acquisition has been below our expectations which is obviously disappointing".

Commenting exclusively for Insight DIY, Martin Lane, Managing editor of money.co.uk said:-

“It’s undoubtedly distressing news for employees of Homebase and their families. Those who fear they could lose their jobs should hope for the best but prepare for the worst. Now is the time to check what redundancy rights you have and dig out any income or mortgage protection policies you hold just in case".  

“Bosses at Homebase took their eye off the ball and forgot to provide shoppers with what they wanted. There just isn’t any room for error when shoppers are the savviest they’ve ever been - these are turbulent times for retailers with competitive pressure from discount rivals and online sales putting constant pressure on stores. The retail industry has dramatically changed, shoppers are reluctant to pay full price and they seek out who’s offering the cheapest online. Stores like Homebase don’t stand a chance against the online retail giants unless they can offer something special.”

Source: Steve Collinge & Insight DIY Team.

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