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Homebase to accelerate store closures | Homebase to accelerate store closures |
(34 minutes later) | |
Home Retail Group plans to cut the number of Homebase stores by 25% by 2019, following a review of the chain. | Home Retail Group plans to cut the number of Homebase stores by 25% by 2019, following a review of the chain. |
The company says a number of its 323 Homebase stores are "unprofitable or are in decline". | The company says a number of its 323 Homebase stores are "unprofitable or are in decline". |
Seven stores have already been closed this year and the firm plans to close another 23 before the end of March. | |
Home Retail Group, also the owner of Argos, reported a pre-tax profit of £13.5m for the half-year to the end of August, a 5% fall on the previous year. | Home Retail Group, also the owner of Argos, reported a pre-tax profit of £13.5m for the half-year to the end of August, a 5% fall on the previous year. |
At Argos like-for-like sales, which strip out new stores, rose 2.9% and at Homebase like-for-like sales rose 4.1%. | At Argos like-for-like sales, which strip out new stores, rose 2.9% and at Homebase like-for-like sales rose 4.1%. |
Home Retail Group warned in 2012 that Homebase stores would be closing, but did not say how many. | |
The review of the chain identified "inconsistent store operating standards" and a level of sales across the chain that resulted in a "challenged financial model". | |
Home Retail Group could not say how many jobs would be affected by the closures, as it hopes to redeploy some of the staff involved. | |
It also says it will work with the new owners of the sites that it vacates in order to re-employ former Homebase workers. | |
Chief executive John Walden said that a three-year plan to improve the productivity of stores "will position Homebase as a smaller but stronger business, ready for investment and growth". | |
Investors 'nervous' | |
City analysts say that Home Retail Group faces a considerable challenge. | |
"Home Retail is today further underlining the rebalancing taking place by the retail industry away from the High Street and towards online sales," said Keith Bowman from Hargreaves Lansdown stockbrokers. | |
"While the relatively new chief executive continues to embrace change, the depth of transformation at the company does heighten investor nerves, near- to medium-term. | |
"Profits have materialised at the low end of expectations, whilst execution of the plan now needs to be made, in which time rivals will be pushing their own e-commerce strategies," he said. | |
As part of the plan to reorganise Homebase, 26 stores have been refitted, which the company says has resulted in "good" overall stales growth. | As part of the plan to reorganise Homebase, 26 stores have been refitted, which the company says has resulted in "good" overall stales growth. |
But Home Retail Group does not, at the moment, plan to refit all of its Homebase stores. | But Home Retail Group does not, at the moment, plan to refit all of its Homebase stores. |
The company will boost the number of Argos and Habitat concessions within Homebase stores, an experiment which it says has been successful. | The company will boost the number of Argos and Habitat concessions within Homebase stores, an experiment which it says has been successful. |
Home Retail Group shares are down 5.6%. | Home Retail Group shares are down 5.6%. |