Oct. 22 (Bloomberg) — Home Retail Group Plc plans to shut about 80 Homebase stores by the end of 2018 as the U.K. home- improvement chain adjusts to an age of online shopping.
About a quarter of the DIY outlets will close as the business is scaled down to adapt to a shift in shopping habits, the owner of the U.K.’s Argos catalog shops said today. Homebase Managing Director Paul Loft will step down, it also said.
“The current estate is too large relative to the demands of the U.K. market and changing digital shopping patterns,” Home Retail said as it reported first-half earnings that missed analysts’ estimates.
The downsizing of the 316-store Homebase chain marks a further shift in the U.K. retailing landscape as more consumers shop for goods online from their tablets and mobile phones. An upgraded web site helped Homebase boost multi-channel sales by 12% in the first half, the company said today.
“The Homebase plan makes sense,” Flor O’Donoghue, an analyst at Davy Research, said in a note. “There is simply too much DIY capacity in the U.K.”
Home Retail shares rose 1% to 177.40 pence in London trading as of 2:33 p.m. after declining as much as 6.2% earlier in the day.
Job Cuts
While one-quarter of Homebase stores will close, job cuts among the chain’s 17,000-strong workforce will be lower than that percentage, Chief Executive Officer John Walden said at a press conference. He declined to give a precise figure.
“The DIY retailing market is over-spaced,” Walden said. The chain’s competitors include Kingfisher Plc’s B&Q.
Homebase will close stores through scheduled lease expirations and a series of property transactions, the company said. About 30 outlets will shut in the current financial year through February, it said.
Home Retail said so-called benchmark pretax profit rose 13% to 30.9 million pounds ($49.7 million) in the first half of the financial year. That missed the 34 million-pound median estimate of seven analysts surveyed by Bloomberg.
Results from Argos were worse than anticipated on higher costs, according to analysts at Sanford C. Bernstein. The chain of catalog shops supplied about 76% of the company’s revenue in the period.
Favorite