Last year, Wesfarmers sold its UK and Ireland Bunnings business and Homebase for £1 while it sought a quick exit from the market.
Investment group Hilco Capital picked the business up for that bargain price and has now released figures measuring its progress so far on returning the business to profit.
Not only that, but Homebase/Hilco Capital has just acquired related business Bathstore, taking on 44 stores (leaving circa 100 stores to close).
A little over one year under the stewardship of Hilco Capital, there have been 52 loss making Homebase stores shut – a number close to that predicted at the time of the takeover. In addition, a distribution site has been closed as well as multiple other storage sites.
Hilco has cut overheads by £34 million per annum and 24 Bunnings-branded stores have been converted back to Homebase (including the one next to Torque HQ in St Albans).
EBITDA improved £140 million in the first six months under the new ownership, with a 3% increase in the gross margin run rate, according to Hilco. Furthermore, Hilco has implemented improved systems and processes to reduce stock loss by more than 30% year-on-year.
There were reports that Amazon was planning to buy up a significant proportion of those ditched Homebase stores to use for warehousing. Since those reports, other retailers have opened in some of the former Homebase stores, such as B&M.
Homebase was already struggling when Wesfarmers bought it in early 2016, for £340 million. Back in 2014, the DIY retailer was looking to cull one in four of its stores, back when it had 323 branches and was owned by Home Retail Group.