Homebase closures to benefit Woodie's
GRAFTON Group's Woodie's chain looks likely to reap rewards from proposed branch closures of DIY competitor Homebase.
Examiner Kieran Wallace, appointed to Homebase earlier this week, is proposing to close three of its 15 branches with stores in Fonthill, Dublin; Carlow; and Castlebar, Co Mayo, set to close. All three locations have a Woodie's store nearby.
"It's not clear whether the closures will be permanent, but Grafton looks likely to benefit even in the short-term," said an analyst covering the deal.
"This is particularly true given that it's all happening in the summer, the peak season for the DIY market," he added.
Woodie's smaller Irish sister operation, Atlantic Homecare, emerged from its own examiner process last year which saw the closure of three stores. The company also secured a substantial reduction in rent.
Homebase has similarly cited upwards-only rent agreements as a major challenge. It has also been hit by a 31pc drop in sales since 2009 and has been unprofitable for each of the past five years.
"This is further evidence of consolidation in Grafton's Irish markets, which will help to drive a sales recovery and the associated operating leverage, all underpinning an improvement in margins," said Dublin stockbrokers Goodbody yesterday.
However, Atlantic Homecare's examiner had proposed five closures, more than were ultimately implemented. This suggests all three Homebase closures may not go through.
Grafton's share price was down 0.91pc in the last five trading days, to €5.45 yesterday.