Written by: Keith Tully
Reviewed: Thursday 9th August, 2018
The owners of the DIY retailer Homebase is planning to close around 60 of its UK stores and work towards a Company Voluntary Arrangement (CVA) deal with its creditors.
CVAs are a form of insolvency which are designed to allow struggling businesses to put themselves on a more stable financial footing.
Several other well-known high street retailers have entered CVA deals in recent months as they aimed to avoid a collapse into administration, including the likes of Carpetright, New Look and Mothercare.
According to reports, Homebase’s recently installed owners Hilco Capital are planning to close a total of 60 of the brand’s 249 outlets, which could threaten roughly 1,000 jobs across the country.
Homebase was acquired by Hilco Capital for just £1 in May of this year after its former owners Wesfarmers decided that they no longer wanted to take on the responsibility of trying to turn around a business which has been consistently reporting losses in recent quarters.
There were a total of close to 11,000 people employed by Homebase when it was acquired by Wesfarmers, an Australian conglomerate, for a fee of £340 million back in 2016.
“The board believes that a sale to Wesfarmers, a substantial and strong group with an ambitious plan for the development of the business in the UK market, is the right step for all parties,” a spokesperson for the former owners of Homebase, the Home Retail Group, said in a statement after its sale to Wesfarmers was agreed in 2016.
The UK’s retail sector has been a particularly tough operating environment in recent months, with several well-known businesses heading into administration and others being forced to restructure in order to avoid the same situation.
According to the Press Association, as many as 50,000 retail sector jobs were either lost or put into serious jeopardy in the UK during the first six months of this year.
The future for the famous and historic department store chain House of Fraser is currently in the balance with efforts being made to keep its operations afloat in the face of considerable financial pressures and the prospect of administration looming large.