The Australian owner of Homebase has thrown in the towel, agreeing to sell the struggling home improvement chain for £1 after a bungled attempt to rebrand it as part of its Bunnings business.
Wesfarmers will book a loss of between £200m and £230m on the sale to HMV owner Hilco Capital, which will change all 24 of the stores converted to Bunnings back to the Homebase brand.
Rob Scott, Wesfarmers managing director, admitted Homebase had been hampered by his company’s “poor execution” after the takeover, compounded by a consumer slump that has swept the retail industry in recent months.
He added: “While the review confirmed the business is capable of returning to profitability over time, further capital investment is necessary to support the turnaround.”
Wesfarmers said Damian McLoughlin, who was hired to run the business in June, will stay put after the sale.
There had been hopes that Homebase could be revitalised by its new owner, which bought the chain from Argos-owner Home Retail Group in 2016. But the revamped stores failed to win over shoppers as popular ranges were replaced by unfamiliar products favoured by Australian consumers.
Richard Lim, chief executive of consultancy Retail Economics, said: “The business is bleeding cash and the owners have decided enough is enough. Unfortunately, the restructuring will almost inevitably lead to store closures and more job losses on the high street."
Earlier this year Wesfarmers said it would close 40 Homebase stores with the potential loss of 2,000 jobs. The chain has around 240 sites.