DIY chain Homebase is reported to be on the verge of going into administration, with the future of 130 stores at risk. The Times says all 130 branches and their employees are at risk.
The chain is expected to appoint administrators from Teneo after Sainsbury’s bought ten Homebase stores with plans to convert them into supermarkets.
Sainsbury’s plans to open the first of these new stores by next summer, marking a significant expansion for the supermarket chain.
The acquisition of the stores and refit programme to follow is expected to cost Sainsbury’s £130million.
In the UK, when a business goes into administration, it means it has entered a legal process designed to help it recover from financial difficulties. Administration is often seen as a step taken when a business is at risk of insolvency, but not yet in liquidation (where assets are sold to pay off debts, and the business is usually closed down).
An independent administrator is appointed, typically an insolvency practitioner, whose job is to manage the business with the goal of either rescuing it or getting the best possible outcome for creditors. This person could be appointed by the business itself, a creditor, or the court.
Once a business enters administration, it gains a “moratorium,” which temporarily protects it from any legal actions or debt collection from creditors. This gives the administrators breathing space to assess options without the pressure of immediate debt repayment.
Sometimes, administration leads to restructuring, which might include selling parts of the business to generate cash. If successful, this can help the business continue under new terms. If the business can’t be saved, it may enter liquidation, where all assets are sold off to pay creditors, and the business is eventually dissolved.
Entering administration often signals that a business is struggling, but it can offer a chance for survival through restructuring or new ownership.
Homebase was founded in 1979 by Sainsbury’s and GB-Inno-BM, a Belgian retailer. The aim was to create a DIY store that also offered a range of home and garden products, targeting a different demographic than traditional builders’ merchants. Homebase grew steadily through the 1980s and 1990s, establishing itself as a recognizable home improvement chain across the UK. By the late 1990s, it had around 80 stores nationwide.
In 1995, Sainsbury’s acquired full ownership of Homebase, integrating the stores more closely with its grocery business. In 2000, Sainsbury’s sold Homebase to the investment firm Schroder Ventures for £969 million.
In 2002, the Great Universal Stores (GUS), the parent company of catalog retailer Argos, bought Homebase for £900 million. GUS later restructured, creating Home Retail Group, which included Homebase and Argos. By the early 2010s, Homebase began facing challenges. Rising competition from online retailers and rival chains like B&Q, Wickes, and Ikea, along with the economic downturn after the 2008 financial crisis, contributed to declining sales and profitability.
In 2016, the Australian conglomerate Wesfarmers acquired Homebase for £340 million with plans to rebrand it as Bunnings, one of Australia’s leading DIY brands. In 2018 Wesfarmers sold Homebase to the restructuring firm Hilco Capital for a nominal £1.
Hilco initiated a restructuring plan that included closing unprofitable stores and renegotiating leases. They reverted all Bunnings-branded stores back to Homebase and focused on the core DIY and gardening offering. In 2021, the American private equity firm HIG Capital acquired Homebase, with the goal of further stabilizing and growing the company.