A disappointing investment.
Wesfarmers has agreed to divest the Homebase business in the United Kingdom and Ireland to a company associated with Hilco Capital. The divestment is expected to be completed by 30 June, 2018.
Under the terms of the agreement, the buyer will acquire all Homebase assets, including the Homebase brand, its store network, freehold property, property leases and inventory. The 24 Bunnings pilot stores will convert to the Homebase brand.
Wesfarmers managing director, Rob Scott said the agreement follows a comprehensive review of the Bunnings UK and Ireland (BUKI) business. “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.
“While the review confirmed the business is capable of returning to profitability over time, further capital investment is necessary to support the turnaround…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.
“The operating performance of the business has improved in recent months under the new management team led by Damian McGloughlin and he will continue to lead Homebase in delivering management’s turnaround plan. We wish Damian and the team well during the transition as they take the business into its next chapter under a new owner with a track record of retail turnaround in the UK.”
Wesfarmers expects to record a loss on disposal of 200 million to 230 Pounds ($352 million to $405 million) in the 2018 full-year financial results.