The Australian proprietor of Homebase plans to shut as much as 40 shops after writing off tons of of tens of millions of kilos over its botched takeover of the DIY chain two years in the past.
Wesfarmers boss Rob Scott admitted to a sequence of “self-induced” blunders as he revealed a £584m impairment cost towards the UK enterprise – greater than the £340m it paid for it in 2016.
The errors included dropping standard strains for kitchens and bogs and underestimating winter demand for a variety of things from heaters to cleansing and storage merchandise.
Wesfarmers is now reviewing the way forward for Homebase’s 234-store community, with a sale not dominated out, and 20 to 40 loss-making shops deliberate for closure.
It didn’t say what number of job losses can be concerned within the closures, that are anticipated to happen within the present monetary 12 months to the tip of June.
The corporate had hoped its buy of the chain would replicate the success of its Bunnings model, and has began to rebrand a few of the shops beneath the Australian chain’s identify.
But it surely now expects the UK enterprise to document an underlying lack of £97m for the six months to 30 December after a “poor buying and selling efficiency” from Homebase.
Wesfarmers can be knocking off £454m of the corporate’s so-called “goodwill” and brand-name worth, plus writing off £130m linked to retailer closure prices, extra or unsuitable inventory, and tax.
It additionally introduced the retirement of Bunnings UK managing director Peter Davis.
Michael Schneider, head of the Bunnings group, stated: “A big quantity of change has been pushed by means of Homebase for the reason that acquisition, and the disruption brought on by the speedy repositioning of the enterprise has contributed to higher than anticipated losses throughout the Homebase community.
“Gross sales have been affected as non-core classes and concessions had been exited forward of the implementation of the Bunnings format, and investments in worth and new ranges haven’t offset these misplaced gross sales.
“Buying and selling was significantly weak in the course of the latter a part of the primary half of the 2018 monetary 12 months.”
Mr Scott stated: “Loads of the underlying causes of the losses we have reported at the moment have been by means of our personal doing.
“Equally we see a possibility to undo a few of these points and enhance efficiency.”
Shares in Wesfarmers fell four.5% whereas within the UK, Kingfisher – proprietor of Homebase’s rival B&Q – was up by greater than 1%, certainly one of only a handful of risers in a broad sell-off on London’s FTSE 100.