Unscrewing the numbers behind Homebase’s closures

Outlook Despite my misgivings about Euan Sutherland’s behaviour at the Co-op, I will say his time at B&Q was a successful one. Had his feet not begun to feel their habitual itch, he would be chief executive of Kingfisher by now.

According to those who worked with him, he was a retail-is-detail kind of guy. He got the product mix right, made sure the stores were stocked well, kept them consistent up and down the country and was clear about strategy. He “got” the City, too, regularly presenting alongside his boss to investors.

His legacy is a B&Q now making £190m profit a year from sales of £3.7bn.

Compare that to Homebase’s £19m profit from £1.5bn turnover and you see B&Q, despite not having had a great 2014, is making 10 times the profit from two-and- a-half times the turnover.

Little wonder. At Homebase, you see Habitat and Liberty soft furnishings alongside timber and powertools. It’s confusing for customers. The soft-furnishings departments compete against everyone from John Lewis to Tesco, while the DIY gear is up against the more specialist sheds of B&Q which have bigger ranges. Meanwhile, the comparison with Homebase’s stablemate Argos is almost as shocking as that against B&Q. Argos makes six times Homebase’s profit from three times its sales.

Homebase’s owners had to act. Having tried to find buyers for many of its stores to no avail, closures were the only option.

As ever, none of these strategic errors were the fault of the thousands now facing redundancy.