UK home improvement chain Homebase is being sold for a nominal sum by Wesfarmers (ASX:WES) just two years after the Australian retail conglomerate bought the business.
The owner of Australia’s No. 2 supermarket Coles, Kmart and Target said turnaround specialist Hilco will buy its 255-store UK DIY chain, ending an offshore adventure that cost it around US$1bn.
Wesfarmers did not disclose a price for the disposal but said the UK exit would bring a loss of up to £230mln this year.
The group paid £396mln for Homebase in 2016 and then launched a US$700mln rebranding under its Bunnings chain.
But Wesfarmers booked a US$1bn write-off for the business this year, admitting it bungled the takeover with basic errors like failing to stock its stores for the chilly UK winter.
Reuters reported that Wesfarmers CEO Rob Scott said on a media call that the UK market proved to be “very competitive (and) the macro and the retail conditions in the UK are quite challenging”.
The move comes a day after Kingfisher PLC (LON:KGF), owner of the UK’s biggest home improvements chain B&Q, said it had a challenging start to the year as poor weather and a difficult UK retail market hurt first quarter sales.
The FTSE 100 listed firm – which also owns Screwfix in the UK and Castorama in France - reported total sales of £2.83bn for the three months to April 30, a 1.2% decline on a reported basis or 2.5% fall at constant currency.