Business

Wesfarmers concedes defeat with £1 sale of Homebase

Restructuring specialist Hilco buys DIY group after Australian retailer learns an expensive lesson

Homebase has been sold by its Australian owner Wesfarmers to retail restructuring firm Hilco, closing the chapter on a disastrous foray into retail in Ireland and Britain. Photograph: Steve Parsons/PA Wire

Fri May 25 2018 - 16:52

Wesfarmers ended its disastrous foray into the home-improvement market in Ireland and Britain, selling its Homebase chain for a pound and announcing a further 406 million Australian dollar loss on the venture.

Australia's do-it-yourself market leader said Friday that Hilco Capital will acquire all of its Homebase assets, including the brand, store network, freehold property and inventory for an undisclosed sum.

Managing director Rob Scott, who in February announced a more than A$1 billion charge on the two-year-old venture, said the investment had been "disappointing".

“While it is important that we learn from this experience, this should not discourage our team from being bold and diligent in pursuing opportunities to create shareholder value,” Mr Scott said in a statement, blaming “poor execution” and a struggling retail sector in the UK.

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Wesfarmers bought Home Retail Group’s chain – including 11 stores in the Republic and another nine in the North – for £340 million in January 2016, betting it could replicate the success of its market-leading Bunnings brand. The effort came unstuck after the Perth-based company imposed a new format that turned off customers.

The company will be entitled to 20 per cent of any future equity distributions from the business, which it said could become profitable over time. Wesfarmers expects to record a loss on the sale of between £200 million and £230 million in its 2018 full-year results. – Bloomberg

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