Homebase owner sees profits slump 87% after UK hit
Wesfarmers confirmed a hit of £524 million on its Homebase division and saw UK and Ireland losses more than treble.
The Australian owner of struggling DIY chain Homebase has revealed woes at its UK business left half-year profits crashing 87%.
Bunnings group Wesfarmers, which bought Homebase in 2016, confirmed a hit of 931 million Australian dollars (£524 million) on its UK and Ireland arm as it saw losses more than treble in the division.
It blamed the “rapid repositioning” of Homebase and difficult trading in the UK for an increase in underlying pre-tax interim losses in the UK business to £97 million from losses of £28 million a year earlier.
The writedown and UK losses left Wesfarmers’ nursing an overall plunge in group profits to 212 million Australian dollars (£119 million) for the six months to December 31 from 1.6 billion Australian dollars (£901 million) a year earlier.
The loss for the half reflected continued trading and execution challenges as a result of the rapid repositioning of Homebase following the acquisition Rob Scott, Wesfarmers managing director
Wesfarmers dealt a blow to staff earlier this month when it put nearly 2,000 Homebase jobs at risk and warned up to 40 stores could shut as part of a review of the business.
The group is rebranding Homebase as Bunnings – a well-known brand in Australia – but the £340 million takeover and overhaul in the UK is so far proving ill-fated, given the differences in the two markets and tough retail trading conditions in Britain.
Wesfarmers reported a 15.5% tumble in revenues to £517 million in the UK and Ireland business and confirmed that five loss-making Homebase branches were closed in its first half.
But it said it was working hard to improve UK trading and will update on its review of Homebase in June.
Wesfarmers managing director Rob Scott said: “The loss for the half reflected continued trading and execution challenges as a result of the rapid repositioning of Homebase following the acquisition.
“The management team has been strengthened and a review is underway to identify the actions required to improve shareholder returns.”
Homebase operates from 250 stores and employs 12,000 people in total in the UK.