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August 14, 2018updated 03 Nov 2021 5:33am

In numbers: Wesfarmers’ disastrous Homebase acquisition

Wesfarmers’ disastrous acquisition of Homebase and the announced closure of nearly a fifth of its 250 stores have led to Homebase losing 2.9 percentage points of the DIY market.

By GlobalData Retail

Wesfarmers’ disastrous acquisition of Homebase and the announced closure of nearly a fifth of its 250 stores have led to Homebase losing 2.9 percentage points of the DIY market.

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In the years before Wesfarmers’ acquisition, Homebase was streamlining its store estate and introducing more homeware lines to appeal to female shoppers, giving it a point of difference and an appeal to an underserved market. And, arguably, with some success, as Homebase reported strong like-for-like sales and operating profit of 10.7% in its financial year ending February 2016 – its final accounts before the acquisition. But, as Wesfarmers undid this hard work, and refocused the business on harder DIY lines, Homebase sales suffered terribly.

New Homebase owner Hilco plans to rebrand all 24 Bunnings stores back to Homebase by autumn 2018, and reduce the estate to around 200 stores. Hilco has had success in trading failing businesses in difficult sectors – HMV being a prime example – but Homebase needs to claw back those female shoppers it worked so hard to capture to differentiate itself. Over the period, rising competition from discounters B&M, Home Bargains and The Range is taking spend from female shoppers; B&M has already taken four of seven recently closed Homebase stores. And, of course, there is Amazon.

Against this backdrop, Homebase is unlikely to regain its former position in the DIY market.

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What’s missing from your IPO industry assessment?

IPO activity all but stopped in 2020, as the investment community grew wary of the effects of COVID-19 on economies. No matter how deserving a business was of flotation, momentum was halted by concerns of when a ‘new normal’ of working patterns and trade would set in. Recently, sentiment has changed. Flotations picked up again during the second half of 2021, and now in 2022 the mood is decidedly optimistic. Business leaders have their eyes on fast rebounding economies, buoyant market indices and the opportunity once again to take their businesses public. As a result, global IPOs are expected to hit back this year. With GlobalData’s new whitepaper, ‘IPOs in Consumer and Retail: 5 must-include elements for your prospectus industry report’, you can explore exactly what is needed in the essential literature. GlobalData’s focus lies in the critical areas to get right:
  • Macroeconomic and demographic environment
  • Consumer context
  • Industry environment
  • Competitive environment
  • Route to market
Interested to learn more about what to include in your IPO Industry Assessment report? Download our free whitepaper.
by GlobalData
Enter your details here to receive your free Report.