Shares in Home Retail Group opened 2.22 per cent down on Wednesday morning (October 22nd) after it announced an acceleration of Homebase store closures.
The company which owns businesses such as Argos, Habitat and Financial Services alongside Homebase announced that it would be cutting one in four of the DIY shops by 2019. Officials said that Homebase is "too large relative to the demands of the UK market and changing digital shopping patterns".
It will result in 25 per cent of Homebase stores being shut over the coming years, over 80 shops in total. Around 30 stores are expected to close in the next six months with the company due to make a series of job cuts in the process. The decision to downsize Homebase's operations comes after Home Retail Group conducted a comprehensive review of the retailer's recent performance.
Overall, Home Retail Group reported a pre-tax profit of £13.5 million for the six months to the end of August. While positive, it represented a five per cent fall on 2013's performance. The organisation's profits were driven by Argos which saw its like-for-like sales grow by 2.9 per cent. Homebase also performed well during this period with its like-for-like sales improving by 4.1 per cent.
Home Retail Group praised the turnaround of Argos following a successful transformation plan and is aiming to do a similar scheme with Homebase. The company believes this will position Homebase as a "smaller but stronger business, ready for investment and growth".
John Walden, chief executive of Home Retail Group, explained the company's future plans: "The successful delivery of the Argos transformation plan over its remaining three years continues to be the group's strategic priority and its greatest potential source of shareholder value. Homebase is a good business with the basis for future growth."
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