U.K. home improvement chain sold—for $1.34
The struggling Homebase chain is getting a new owner.
Wesfarmers, the Australian retail group, agreed to sell Homebase for 1 pound ($1.34) to Hilco Capital, a London-based restructuring company. Wesfarmers acquired Homebase, which operates 255 stores, in 2016 for 340 million pounds, (about $530 million).
“A divestment under the agreed terms is in the best interests of Wesfarmers’ shareholders and will support the ongoing reset and repositioning of the Homebase business,” stated Wesfarmers managing director Rob Scott. “The investment has been disappointing, with the problems arising from poor execution post-acquisition being compounded by a deterioration in the macro environment and retail sector in the UK.”
Homebase was Wesfarmers’ first overseas acquisition—the company intended to eventually rebrand the acquired chain to its own do-it-yourself banner Bunnings. British retail experts agree the takeover has been a disaster, starting with Wesfarmers’ decision to get rid of Homebase management immediately after the deal closed.
“The decision to get rid of all that local knowledge runs completely counter to everything retailers have been saying and doing over the last 10 years – you must know your customer, and adjust your model to fit what they want,” said Patrick O’Brien, U.K. retail research director at GlobalData. “Instead, it [Wesfarmers] thought it could impose its model on the UK consumer.”
O’Brien said the the Wesfarmers board seemed unaware of the U.K. climate, customer behavior and living environment.
“The product mix was such that Wesfarmers must have thought that British people spent most of their time outdoors in enormous gardens cooking on large barbeques,” he said.
Hilco said the 24 pilot stores Wesfarmers converted to the Bunnings brand will be converted back to the Homebase banner.
Wesfarmers, the Australian retail group, agreed to sell Homebase for 1 pound ($1.34) to Hilco Capital, a London-based restructuring company. Wesfarmers acquired Homebase, which operates 255 stores, in 2016 for 340 million pounds, (about $530 million).
“A divestment under the agreed terms is in the best interests of Wesfarmers’ shareholders and will support the ongoing reset and repositioning of the Homebase business,” stated Wesfarmers managing director Rob Scott. “The investment has been disappointing, with the problems arising from poor execution post-acquisition being compounded by a deterioration in the macro environment and retail sector in the UK.”
Homebase was Wesfarmers’ first overseas acquisition—the company intended to eventually rebrand the acquired chain to its own do-it-yourself banner Bunnings. British retail experts agree the takeover has been a disaster, starting with Wesfarmers’ decision to get rid of Homebase management immediately after the deal closed.
“The decision to get rid of all that local knowledge runs completely counter to everything retailers have been saying and doing over the last 10 years – you must know your customer, and adjust your model to fit what they want,” said Patrick O’Brien, U.K. retail research director at GlobalData. “Instead, it [Wesfarmers] thought it could impose its model on the UK consumer.”
O’Brien said the the Wesfarmers board seemed unaware of the U.K. climate, customer behavior and living environment.
“The product mix was such that Wesfarmers must have thought that British people spent most of their time outdoors in enormous gardens cooking on large barbeques,” he said.
Hilco said the 24 pilot stores Wesfarmers converted to the Bunnings brand will be converted back to the Homebase banner.