Struggling retailer Homebase has called in a specialist consultancy firm to help advise its management team with fears over the DIY chain’s future intensifying.
The Press Association today reported that Boston Consulting Group has been brought in to advise boss Damian McGloughlin, who only took the helm in January, two years after it was bought by Australian conglomerate Wesfarmers for £340million.
Homebase’s future was thrown into doubt two months ago when Wesfarmers announced a £584m hit from the acquisition, and said half-year losses would widen from £28m to £97m.
Deepening woes: Struggling retailer Homebase has called in a specialist consultancy firm to help advise its management team with fears over the DIY chain’s future intensifying
Rob Scott, Wesfarmers’ managing director, warned that up to 40 stores could close – putting 2,000 jobs at risk.
BCG’s appointment comes as Wesfarmers conducts a strategic review of Homebase, with a decision due in June.
Retail experts have criticised Wesfarmers for failing to judge the UK market correctly after buying Homebase from Home Retail Group in January 2016.
Wesfarmers is known for its Bunnings chain in Australia, and attempted to import the home improvement brand to the UK by converting 19 Homebase stores into the Bunnings format.
However, the fast pace of the transition gave Wesfarmers little time to introduce the Bunnings brand, which is highly successful in Australia, to the UK consumer.
When it launched in the UK, Bunnings unveiled plans to overhaul stores, hire more staff and promised to undercut competitors’ prices by 10 per cent.
But British shoppers turned their noses up at the Bunnings brand, claiming the layout was similar to a ‘jumble sale’.
Jonathan De Mello, head of retail consultancy at Harper Dennis Hobbs, said: ‘Obviously the rebrand did not work and they did not spend enough money on that rebrand in the UK.’
At risk: Rob Scott, Wesfarmers’ managing director, warned that up to 40 stores could close – putting 2,000 jobs at risk
Wesfarmers also fired Homebase’s senior management team, alongside more than 150 middle-managers, soon after its doomed acquisition of the retailer.
Investment bank Lazard has now been appointed to sound out buyers for the business, which has around 250 UK stores and employs around 12,000 people.
Private equity firms, including Hilco, Endless and Lion Capital, as well as bargain retailer B&M, are also considering a bid for the business.
Homebase and BCG declined to comment.
Break up: Homebase was previously part of Home Retail Group, which also included Argos, before it split
Homebase was previously part of Home Retail Group, which also included Argos.
This was split up when Homebase was sold to Wesfarmers and Argos was bought by Sainsbury’s.
Its troubles add to the gloom engulfing the British high street following a spate of restructuring and refinancing deals in the face of bitter trading conditions.
Rampant inflation, rising business rates and a hike in the National Living Wage have hammered margins and pushed some retailers to the brink.