Homebase in trouble when branded Brunnings?
Homebase was purchased for £340 million in 2016 by an Australian based company Wesfarmers with radical plans to change the Homebase model but it appears to all have gone very sadly wrong and now the future of the remaining stores either badged as Homebase or Brunning's warehouse seemed in doubt as there are rumours that managing director Rob Scott will have to make a decision on how to plug a massive loss in the UK which could result in them pulling out altogether.
We hear that Wesfarmers are likely to lose around £97 million in the first half of this financial year, far more than they had projected and some 300% more than the losses in the first half of 2017.
This story of buy cheap and stack them high seems to have misfired and while I was finding a few good bargains at my local Homebase hearing Kings Heath much of the material brought in since the Brunning's takeover seemed to be a very poor quality and simply not worth buying and I wonder if that is what the majority of the public are also thinking.
This comes on top of the threat of the closure of around 30 or more stores out of the 250 in the UK because they are unprofitable. Brunning's had spent £50 million on 19 Homebase conversions completed and a further five underway but with a cost of conversion being 1 to £2 million each it seems unlikely that these conversions will continue.
A statement from Brunning's said selling the business is not a preferred option but would leave £1 billion in outstanding lease liabilities and there are over £200 million in annual lease cost. I wonder how much effect the bad weather this winter has had on them and how much was simply buying into a market they didn't understand. A city analyst says the market has firm expectations that the new senior management team will announce their exit from Brunning's UK within 12 months.
This comes on top of the news that Terra Firma owned Y Vale garden had a hunch and 22 million write-down loss in September while two sets of management changes at dobbies suggests another big garden retailer cannot find its way in the crowded market. Meanwhile Homebase is biggest rival B and Q has shed 200 management jobs in the strategy to streamline the business.
Maybe this offers the opportunity for smaller and independent nurseries and garden centres to craft out their own special niche markets with speciality plants, specialist events and extra special customer care.