1,500 jobs to go as Homebase closes 42 stores but NI survives
Homebase stores across Northern Ireland are to avoid closure in the latest round of cuts that are set to make 1,500 people redundant.
The company announced a further 42 store closures on Tuesday afternoon, but all nine stores across the province will continue trading though two in Dublin are to be axed.
The retailer is closing the stores via a Company Voluntary Arrangement (CVA), a controversial insolvency procedure used by struggling firms to shut under-performing shops.
Homebase boss Damian McGloughlin said: “Launching a CVA has been a difficult decision and one that we have not taken lightly.
“Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the under-performance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs.
“The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead.”
The firm said it would try to redeploy affected staff.
Restructuring experts at Alvarez & Marsal will carry out the CVA, which will require the support of landlords.
The Press Association first reported in June that Homebase was exploring further store closures through the procedure.
The latest restructuring would come on top of a store closure programme the retailer has been carrying out since February.
A total of 16 Homebase stores have been shut this year and the business has also axed 303 jobs at its head office in Milton Keynes.
Explaining its predicament, Homebase said: “Rental costs associated with stores are unsustainable and many stores are loss-making.
“Homebase’s sales performance and profitability declined significantly under the previous ownership over the last two years.
“In addition, the company has faced an extremely challenging retail trading environment, reflecting weak consumer confidence and reduced consumer spending.
“These factors have had a significant adverse impact on Homebase’s trading position.”
Homebase could see some resistance from landlords to the CVA, with the property industry expressing disdain for the procedure, saying it leaves them out-of-pocket.
CVAs have been adopted by a host of retailers including New Look, Carpetright and Mothercare.
The Homebase store closures follow the sale of the business earlier this year by its former Australian owner Wesfarmers to Hilco, a retail turnaround specialist, for £1.