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5 February 2018, 10:02
The Australian owner of Homebase plans to close up to 40 stores after writing off hundreds of millions of pounds over its botched takeover of the DIY chain two years ago.
Wesfarmers boss Rob Scott admitted to a series of "self-induced" blunders as he revealed a £584m impairment charge against the UK business - more than the £340m it paid for it in 2016.
The errors included dropping popular lines for kitchens and bathrooms and underestimating winter demand for a range of items from heaters to cleaning and storage products.
Wesfarmers is now reviewing the future of Homebase's 234-store network, with a sale not ruled out, and 20 to 40 loss-making stores planned for closure.
It did not say how many job losses would be involved in the closures, which are expected to take place in the current financial year to the end of June.
The company had hoped its purchase of the chain would replicate the success of its Bunnings brand, and has started to rebrand some of the stores under the Australian chain's name.
But it now expects the UK business to record an underlying loss of £97m for the six months to 30 December after a "poor trading performance" from Homebase.
Wesfarmers is also knocking off £454m of the company's so-called "goodwill" and brand-name value, plus writing off £130m linked to store closure costs, excess or unsuitable stock, and tax.
It also announced the retirement of Bunnings UK managing director Peter Davis.
Michael Schneider, head of the Bunnings group, said: "A significant amount of change has been driven through Homebase since the acquisition, and the disruption caused by the rapid repositioning of the business has contributed to greater than expected losses across the Homebase network.
"Sales have been affected as non-core categories and concessions were exited ahead of the implementation of the Bunnings format, and investments in price and new ranges have not offset these lost sales.
"Trading was particularly weak during the latter part of the first half of the 2018 financial year."
Mr Scott said: "A lot of the underlying causes of the losses we've reported today have been through our own doing.
"Similarly we see an opportunity to undo some of those issues and improve performance."
Shares in Wesfarmers fell 4.5% while in the UK, Kingfisher - owner of Homebase's rival B&Q; - was up by 2.3%, one of just a handful of risers in a broad sell-off on London's FTSE 100.
(c) Sky News 2018: Homebase store closures planned after owner admits botched takeover