Six years after Bunnings owner Wesfarmers flogged the UK Homebase chain of hardware stores for A$1.96 after an ill-fated attempted to break into the UK DIY market has been sold out of administration.
Wesfarmers ended up reporting a $1 billion dollar write off and a half-year loss of $165 million for a UK chain that was making money before Wesfarmers bought it in 2016.
Overnight it was announced that Range and Wilko owner, CDS Superstores, has acquired the Homebase brand name, intellectual property, and up to 70 UK stores, after DIY retailer plunged into administration.
Bunnings misery in the UK came to an end On 25 May 2018, when Wesfarmers announced that Homebase had been sold by Wesfarmers to turnaround specialists Hilco, for a nominal $1.96.
Hilco took ownership of the business on 12 June 2018. All 24 stores converted to the Bunnings format were rebranded back to Homebase.
Under the new deal the Homebase brand will continue to trade online, and the stores acquired by CDS will continue to trade as Homebase over the coming months but will re-open as The Range stores with a “much broader choice across garden, showroom and DIY categories” claim management.
CDS Superstores group CEO Alex Simpkin said: “We plan to continue to invest in the Homebase brand, with many initiatives in the pipeline.”
Homebase chief executive Damian McGloughlin said the chain had struggled during the cost-of-living crisis, and this had been exacerbated by global supply chain problems and unseasonable weather.
The CDS deal will save up to 1,600 jobs. However, the future remains uncertain for the around 2,000 workers at the DIY retailer’s other 49 stores, although the administrators hope to sell additional stores.
Bunning thought they were onto a winner with Homebase despite the Woolworths’s Masters debacle at the time.
It was all meant to be so easy according to management at the time.
Buy Homebase, which is Britain’s number two hardware chain and turn it into another Bunnings cash cow.
The only problem is that the UK consumer didn’t buy their dream.
So how did Wesfarmers get it so wrong?
Steve Delo, a former senior executive at Britain’s leading hardware chain, B&Q, is now a managing director at London-based consulting house Pragma.
“When Bunnings sought to set out its stall in the UK, by moving itself very close to the number one in the UK it effectively lost a lot of its points of differentiation,” Mr Delo told ABC TV’s The Business at the time.
“That is because the UK already has a successful Bunnings-style store, B&Q.”
“One could change the colour of the Bunnings red, to orange, and you would have B&Q in its absolute outside appearance,” Mr Delo explained.
