Wesfarmers, the Australian owner of DIY chain Homebase, has seen its share price drop almost 5% following news that 2,000 Homebase staff could be axed and up to 40 UK stores shut.
Wesfarmers, which owns Homebase’s parent firm Bunnings UK, said today that trading at the chain had been “poor” as it revealed a £454m impairment charge linked to its acquisition of the retailer.
In a statement to the stock market, Wesfarmers managing director Rob Scott said. “The Homebase acquisition has been below our expectations which is obviously disappointing.
“In light of this, a review of Bunnings UK has commenced to identify the actions required to improve shareholder returns,”
The group also confirmed that between 20 and 40 of the worst performing Homebase stores could be shut. Homebase operates from 250 stores across the county and employs 12,000 in total in the UK.
Poor trading at Homebase is expected to drag Bunnings into an underlying loss of £97m for the first half of the year, Wesfarmers confirmed.
“We need to address underperformance in our portfolio that is detracting from positive performance in other areas, and the announcement today sets out decisive actions to achieve this,” Scott added.
Bunnings acquired Homebase in 2016 in a £340m deal and has been attempting to reinvigorate the brand.
As well as refurbishing selected stores and competing harder on prices, Homebase is in the process of being rebranded as Bunnings.
Wesfarmers said that its review will evaluate the performance of rebranded pilot stores to “inform the future plans for Bunnings UK”.
In addition, Peter ‘PJ’ Davis, managing director Bunnings UK & Ireland, who lead the move into the UK, is to retire from the business with Damian McGloughlin taking his place.