Loft goes in Homebase shake-up as it prepares to cull stores
Homebase md Paul Loft is to leave the chain after paying the price for patchy performance across its 323 stores. A quarter of branches are to close in the next four and a half years.
Trials of 26 refitted branches, including Habitat and Argos concessions, have boosted sales but an operations review by parent Home Retail Group found 'inconsistent store operating standards and a large estate with low sales densities that result in a challenged financial model. These factors are currently limiting Homebase's operational efficiency and constraining the success of a more aggressive store investment programme.'
As a result about 80 stores will be closed, with store numbers cut to 295 in the next 18 months. Although seven further refits are being undertaken, the format will not be rolled out before the end of the 2018 financial year. 'Early results from Homebase refit trials have demonstrated that increases in operating standards can improve both a store's customer experiences and its financial performance, and are essential to support more significant future store investments. Although a significant rollout of complete Homebase refits is unlikely during the plan period, trials could give rise to promising components being implemented,' says HRG.
John Walden, Home Retail Group chief executive was able to give shareholders some good new about the chain. Homebase's sales of Habitat branded products have rise by 45% in the past year and sales of Schreiber kitchens continue to increase. Sales of its lower cost Essentials kitchens are up a fifth.
The chain saw overall like for like sales rise by 4.1%, helped by further growth in sales of big ticket products, particularly fitted kitchens and bathrooms. However operating margin was flat at 3.3%.