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Saving For a Space Ship

DIY retailer Homebase sold by Wesfarmers for just £1

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9 minutes ago, stuckmojo said:

Didn't they buy a business they didn't understand with the intention to turn it into the same thing they have in Australia? If so, half of the board of Wesfarmers need sacking. 

 

yes

‘Homebase is the most disastrous retail acquisition in the UK ever’

 

https://www.theguardian.com/lifeandstyle/2018/mar/30/homebase-is-undoubtedly-the-most-disastrous-retail-acquisition-in-the-uk-ever  

Quote

But even packing up and going home would be a massive headache for Wesfarmers because it is on the hook for Homebase’s £1bn rent bill over the length of its leases.

In a recent note, the JP Morgan analyst, Shaun Cousins, calculated it would cost Wesfarmers about £600m to throw in the towel versus more than £800m to finish the job. Neither option looks attractive. A third route would be to keep the 23 converted Bunnings stores open and close the rest. “The least-bad outcome is exit,” was Cousins’ stark assessment.

“Bunnings wholly underestimated the complexity of the UK market,” says Richard Lim, chief executive of Retail Economics. “The shop environments didn’t live up to customers’ expectations, while product selection failed to resonate with their core customers. These self-inflicted wounds have been an incredibly expensive lesson for the retailer with the prospect of exiting the UK becoming a realistic scenario”.

Britons’ appetite to spend money on sprucing up their homes has been muted in recent months amid rising living costs and a softening housing market. Even market leader B&Q is finding it hard to get shoppers to part with their cash. Its like-for-like sales were down 5.1% in the three months to the end of January.

“Personal finances remain under pressure,” says Lim. “While inflation has fallen sharply over the last month, real incomes still remain in negative territory. This is taking its toll, particularly on discretionary big-ticket items such as fitted bathrooms and kitchens.”

 

https://www.ft.com/content/18037334-5fc6-11e8-9334-2218e7146b04

 

Edited by Saving For a Space Ship

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" Wesfarmers is allowed to take a fifth of future dividends or capital returns to shareholders "

" through further capitalisation and restructuring, Homebase is capable of returning to profitability "

So they are going to borrow a load of cash, pay out dividends/returns and then go bust in a couple of years?

I really can't see how they will survive.

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No chance of turning those around.The discounters like Home Bargains sell a lot of the high margin stuff now at 2/3s the price like grass seed/feed weedkiller etc.Tools,nails,screws etc everyone goes to Screwfix.

Not only that the country is full of everything.Got my dad a lawnmower and a strimmer from Gumtree for £20 the pair.The stuff they import (most of the bigger stuff) is shooting up in price as factories in China put through 10/15% price increases,and thats before the affect of sterling falls.

 

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1 hour ago, Saving For a Space Ship said:

Follows te most disastorous service business purchase  - Quindell.

Also by an Ozzy c. - Slater + Gordon.

Funny that.

And the money poured in Sirius hole inthe ground by that richest ozzy woman.

 

 

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3 minutes ago, durhamborn said:

No chance of turning those around.The discounters like Home Bargains sell a lot of the high margin stuff now at 2/3s the price like grass seed/feed weedkiller etc.Tools,nails,screws etc everyone goes to Screwfix.

Not only that the country is full of everything.Got my dad a lawnmower and a strimmer from Gumtree for £20 the pair.The stuff they import (most of the bigger stuff) is shooting up in price as factories in China put through 10/15% price increases,and thats before the affect of sterling falls.

 

I'm finding Toolstation usually cheaper than screwfix with a few exceptions . 

EBay for screws etc appears to have many biz's not making any profit with the eternal race to the bottom 

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16 minutes ago, durhamborn said:

No chance of turning those around.The discounters like Home Bargains sell a lot of the high margin stuff now at 2/3s the price like grass seed/feed weedkiller etc.Tools,nails,screws etc everyone goes to Screwfix.

Not only that the country is full of everything.Got my dad a lawnmower and a strimmer from Gumtree for £20 the pair.The stuff they import (most of the bigger stuff) is shooting up in price as factories in China put through 10/15% price increases,and thats before the affect of sterling falls.

 

Agreed on inflation on Chinese goods. I see that too. (obviously not on tat that's been sitting in warehouses for 18 months). 

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3 minutes ago, Saving For a Space Ship said:

I'm finding Toolstation usually cheaper than screwfix with a few exceptions . 

EBay for screws etc appears to have many biz's not making any profit with the eternal race to the bottom 

Yep Toolstation even cheaper than Screwfix for lots of things if one near.Margins are going down to pretty much zero everywhere.The difference is going to be simply cost base,lease structure and debt size.Of course who survives will see margins improve again down the road,but massive pain ahead first.I sell online in the space and im starting to see people throw the towel in.One line i didnt bother bringing in this year for one reason or another now has no UK competition,it only sells well spring/summer though so too late now.

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I worked for homebase from age 16 for 5 years through college and Uni. The area manager wanted me to forgoe my education and become a store manager, and I would get business related NVQs while I worked for them. It was under Sainsburys then and had recently bought out Texas and was doing reasonably well. Obviously I didn’t listen to him, I just pity the poor workers still there (having visted the local branch recently) and seeing the place resemble a shabby discount store.

What a ridiculous board decision, jumping in with no retail research. Having spent a year or so in Australia and having family there  I can picture the board. “Yeah mate, we’re gonner expand into the UK”, “Shouldn’t we test the water first?” “Nah mate, she’ll be right”.

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5 minutes ago, stuckmojo said:

Agreed on inflation on Chinese goods. I see that too. (obviously not on tat that's been sitting in warehouses for 18 months). 

Should see the inflation of chinese labour ....

Tere's a lot of idiots who outsourced to China10-15 years ago who are now finding that wages are still increasing at 15-20%

That was fine when Chinese Labour was 30% of the UK, ~20 years ago.

Now its more expensive.

Shame the people who made the outsource decision are no longer employed to pick up the sh1t.

 

 

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1 hour ago, stuckmojo said:

Didn't they buy a business they didn't understand with the intention to turn it into the same thing they have in Australia? If so, half of the board of Wesfarmers need sacking. 

LOL, will they never learn?

I sold a company to a PLC in 1989 for a good price. They had big ideas, lost their shirt trying to break into the US market. Long story, short, I bought the electronics division (which was my old company) off them for £1 in 1994.

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1 hour ago, Lavalas said:

So last week I give them £50 for a strimmer when I could have bought the whole business for a quid. I can’t catch a break.

😄😄

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3 minutes ago, stuckmojo said:

Agreed on inflation on Chinese goods. I see that too. (obviously not on tat that's been sitting in warehouses for 18 months). 

An item per unit i paid $35 for the last 4 years has now gone to $39.50 simply due to $/RMB and their cost increases .Very good relationship with the factory through my agent iv used for years so its genuine.Couriers have all put their prices up as well for larger parcels.With the £ falls from a couple of years ago as well the profit on a container has gone from £18k to £7k and thats before any other cost increase like staff costs,energy,rates etc.Lucky for me i have no other costs apart from storage and only aim for the tax allowance anyway so simply bring in 1.5 containers a year instead of 0.8,but it shows the sort of problems the retailers have.You simply cant pass on much of the increase,maybe 30% of it if your lucky.

Like you say people are running out of stock now when things were easier,and i know several decent sized companies (circa £10 mill turnover) who are really struggling and cash flow negative,eating into their stock slowly.

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My wife bought something at Homebase a month ago, on the understanding that they would take it back for a full refund if we found it cheaper elsewhere, including online. I found it for 20% less on Amazon so she took it back to Homebase for a refund. Guess what, "we don't price match Amazon" and no amount of arguing would convince them to honour their word. My wife was so annoyed that she accidentally knocked over a display stand on her way out.

Good riddance :D. It used to be a good company, though.

 

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11 minutes ago, Bruce Banner said:

My wife bought something at Homebase a month ago, on the understanding that they would take it back for a full refund if we found it cheaper elsewhere, including online. I found it for 20% less on Amazon so she took it back to Homebase for a refund. Guess what, "we don't price match Amazon" and no amount of arguing would convince them to honour their word. My wife was so annoyed that she accidentally knocked over a display stand on her way out.

Good riddance :D. It used to be a good company, though.

 

But, to be fair (?) Homebase have a load of hangers on the pay ...... government people ..... rentier people.... China people don't have that.

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2 hours ago, Saving For a Space Ship said:

Even market leader B&Q is finding it hard to get shoppers to part with their cash. Its like-for-like sales were down 5.1% in the three months to the end of January.

B&Q are even more of a rip-off than Homebase.

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1 hour ago, spyguy said:

Should see the inflation of chinese labour ....

Tere's a lot of idiots who outsourced to China10-15 years ago who are now finding that wages are still increasing at 15-20%

That was fine when Chinese Labour was 30% of the UK, ~20 years ago.

Now its more expensive.

Shame the people who made the outsource decision are no longer employed to pick up the sh1t.

 

 

Agreed. New wage arbitrage game is Vietnam/Myanmar. Except the real estate and outsourcing companies have already been there and this time the gap will close very quickly. 

 

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1 hour ago, durhamborn said:

Tools,nails,screws etc everyone goes to Screwfix.

I really don't like Screwfix. Recently I needed 2.5 metres of cable and went there and got told they had it in stock but I had to buy a pre-packed 50 metres. It was amazingly cheap for 50m but even so I would have been left with most of it which I haven't got any space to keep but neither would my inner thrift-angel let me chuck it in the bin. Back in the day you could go into Homebase and cut yourself a few metres off a cable reel on a spindle. Bet you anything it's the same with screws in packs of 200 or something.

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Even Screwfix seems to be expensive and I have started using eBay more

Recently I ordered a power tool now the same model nothing extra

B&Q £359

Screwfix £249

Axminster Tools £192 

Amazon £189

eBay £179

eBay Auction won for £128  ( its brand new pretty much used once or twice just sat in a workshop)

 

 

Edited by DoINeedOne

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Lol a total disaster! How to wreck a business. Though Homebase was already a train wreck before they took over! (Edit the train’s gone derailed and half way down a mountainside )

Edited by Ash4781

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