Homebase returns to profitability as turnaround plan bears fruit, says GlobalData

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Following today’s release of Homebase FY figures for 2018/19, Amy Higginbotham, retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Homebase made significant progress in 2019. Just 18 months into its three year transformation plan, Homebase has demonstrated that it has recovered from its disastrous Wesfarmers ownership. The DIY specialist returned to profitability ahead of schedule, achieving a £3.2m EDITDA profit, the result of improved gross margins and a £180m reduction in its cost base. It claims that almost all of its remaining 164 stores are now profitable, and the retailer plans to conclude its CVA in April this year, 18 months earlier than it had originally planned. Homebase’s performance is particularly commendable when compared to that of B&Q, which struggled throughout 2019.

Homebase’s strategy to expand its homewares and furniture ranges (it introduced 3,000 new products in 2019) is undoubtedly the right one, as this has helped it boost brand appeal and widen its customer base. It continues to invest in its stores – it refurbished 51 stores in December 2019, creating new homewares departments and kitchen showrooms, and introduced new concessions including Silentnight, Ponden Home and Bathstore (which it acquired in July last year). Homebase plans to continue expanding its offer and introduce new concession partnerships, and this will help it become a destination for Home purchases. It also announced plans to trial a new smaller store format, Decorate by Homebase, which will focus on decorative DIY such as paint and tiles, and will rival B&Q’s GoodHome stores.

Online sales increased by more than 50% as the DIY specialist continues to invest in its online proposition – online operations were deprioritised under its previous ownership, so some bounce back was expected. It improved online fulfilment at the end of last year, introducing features such as order tracking, and plans to launch next and named day delivery in March, as it continues to focus on making the shopping experience easier for customers. However, there is still much room for improvement, with click & collect not yet available.”