Australian company Wesfarmers sold the loss-making DIY chain to Hilco for just £1 in May, two years after purchasing it for £350m, describing it as a “disappointing” investment.
On Tuesday, the retailer said its sales performance and profitability had “declined significantly under the previous ownership over the last two years”.
Wesfarmers had originally aimed to rebrand the business as Bunnings, which is the name of the firm’s DIY chain in Australia.
“In addition, the company has faced an extremely challenging retail trading environment reflecting weak consumer confidence and reduced consumer spending.
“These factors have had a significant adverse impact on Homebase’s trading position,” the firm said.
Homebase said the CVA would allow it to make “essential changes to its store portfolio, reducing its cost base and providing a stable platform on which to continue its turnaround”.
The store closures are expected in either late 2018 or early 2019. The company said it expects a reduction of 1,500 staff, but said “every effort will be made to redeploy team members within the business where possible”.
When the retailer was sold to Hilco, shop workers’ union Usdaw said staff were concerned about the future.
On Tuesday, David Gill, Usdaw national officer, said: “Homebase staff feared the worst when the company was sold for just £1 following the disastrous ownership by Wesfarmers.
“I am seeking urgent clarification from Hilco about their long-term plan to turn the company around. All too often staff are excluded from the CVA process as the future of their jobs are being decided.
He added: “Clearly there is a huge task ahead, it is crucial that the company listens to the staff and invests in their experience and expertise to turn the business around and again make it a success.
“This is best achieved through their trade union Usdaw. We are in touch with the company and continue to providing our members with the representation, support and advice they require at these uncertain and difficult times.”
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