Homebase fades away
It’s always sad to see companies – and their staff – going through pain. And it’s always tempting to cry “See, we told you: Death of the High Street” when it comes to retail trouble, in particular. But where it’s right to feel sorry for the human impact of Homebase’s current distress, we don’t need to be anything like as queasy when it comes to telling the story of the decline of the institution itself.
The comparative performance of Homebase and Kingfisher in the UK is particularly stark, both on a top-line basis (Figure 1) and in terms of Operating Margin, where Kingfisher PLC beat Homebase to the punch in each of the past fifteen years (Figure 2)
Figure 1
Figure 2
From 2008 to 2023, Homebase lost an average of ￡45m per year (more than ￡650m in total). It couldn’t go on for ever like that.
We could say that the demise of Homebase is merely the result of missing the rise of convenience shopping for household goods (Figure 3). Exclude Screwfix from Kingfisher’s UK store count, and Homebase doesn’t look all that different from B&Q.
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Figure 3
But Homebase’s demise isn’t just a contrast with Kingfisher, because Wickes, The Range and B&M have all put in decent top-line growth in recent years (Figure 4). There was nothing wrong with the market Homebase was in – it just faded away over time in comparison, licking wounds and not having the financial strength to re-invest.
Figure 4
Truth be told, Homebase appears to have been the victim of far too much ownership turnover over the past twenty-five years, and not enough consistent top-down focus on the business of being a Household Goods Retailer. A subsidiary of J Sainsbury PLC at the turn of the Millenium, Homebase twenty years ago was owned by the same people (Great Universal Stores PLC) who owned a majority of Burberry and Experian, no less. When GUS PLC de-merged in 2006, Homebase continued under the ownership of Home Retail Group PLC before being sold in 2016 for a two-year stint under the ownership of Australian retailer Wesfarmers, before being taken private (for ￡1) in 2018 (where it has subsequently remained). With such turbulence at the top table over recent years, it is perhaps little wonder that Homebase’s (changing) owners did not have either the vision or the stomach for refreshing the business in the changing market around it.
The demise of Homebase is sad, mostly let down (at least from what we can see) by the people sitting in and around its Board room, not the people standing on its Shop floors. But it isn’t the harbinger of further doom and gloom on the proverbial High Street, nor is its demise symptomatic of the immediate UK retail market around it, which we think is actually growing, and set to perform better than most people currently seem to think in the years directly ahead.
Head of Reward and Data Analytics
3 个月Hello Stuart! My (non-economist) view is that in recent years, Homebase has fallen into the trap of trying to become all things to all people. What do I mean? Well, as a DIY enthusiast, Homebase and Wickes were my go-to stores for tools, paint, timber etc. In recent years, I have noticed that Homebase had moved into soft furnishings, Habitat franchises, general homeware products etc - things that many other retailers already did much better. In short, I think Homebase lost sight of what it wanted to be, and lost customers accordingly.
Founder/CEO of Socially Spirited
3 个月I used to cover Homebase back in the day when it was part of GUS and whilst it has always somewhat struggled, it was profitable back then and the top line performance was resilient. I’m no expert anymore but it was always at the much ‘softer’ end of DIY than B&Q (and certainly Wickes) but never really managed to compete in the core soft furnishings category versus the likes of Dunelm, leaving it somewhat in ‘no man’s land’. I haven’t been in a store for years (obviously not the only one) but perhaps that remained the problem?