Home Retail to close 25 pc of Homebase stores by 2018

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HOME Retail, Britain’s biggest household goods retailer, plans to close a quarter of its Homebase stores in the next three years as it prioritises the development of its larger and more profitable Argos chain.

The group said yesterday it would close about 80 of its 323 stores over the next four years through a combination of lease expirations and property exit deals with other retailers.

The company has about 16 stores in Yorkshire, including Leeds and Wakefield.

A spokesman for Home Retail said no decision had been made about which stores would close.

Homebase, like its larger UK rival B&Q, has suffered from an excess of retail space, the growth of non-traditional competitors such as supermarkets and the rise of a generation less skilled in DIY projects.

Paul Loft, Homebase’s managing director, is to step down when a successor is found, the firm said.

A shake-up will aim to improve product availability, presentation and customer service. It will also see it take advantage of online technology developed by Argos.

The announcement came as the group’s half-year results showed that though sales and profits were rising at Homebase, earnings growth was lagging behind that of Argos where they soared by 57 per cent.

The 747-store Argos chain is being reinvented from a catalogue firm to a digitally-led business, targeting more sales from tablet PCs and mobile phones.

Argos, which has a distribution centre in Castleford, is investing £300m in a five year plan that is targeting a 15 per cent rise in sales to £4.5bn by 2018.

Home Retail posted a 13 per cent rise in underlying first-half profit to £30.9m in the six months to August 30. Sales increased three per cent to £2.7bn, with sales at stores open over a year up 2.9 per cent at Argos and 4.1 per cent at Homebase.

Group chief executive John Walden said: “The Homebase agenda must...be set in the context of the Argos transformation plan which will be the group’s greatest potential source of shareholder value and must therefore be the near-term priority of both the group’s focus and its resources,”