DIY retailer Homebase is set to close 42 stores, putting around 1,500 jobs at risk.
The retailer is closing the stores via a Company Voluntary Agreement (CVA), a controversial insolvency procedure used by struggling firms to shut under-performing shops.
Homebase said it anticipated the outlets would close from later this year into 2019.
Until then, “all stores in the UK and the Republic of Ireland will remain open for business as usual and this process will have no impact on customer purchases, outstanding orders or any product or service guarantees”.
It said a “comprehensive review” had concluded that its current store portfolio mix “is no longer viable”.
“Rental costs associated with stores are unsustainable and many stores are loss making,” it said.
The CVA procedure would allow the business to make essential changes to its store portfolio and reduce costs.
Homebase said the proposed changes would “regrettably mean redundancies”.
“The process is expected to lead to a reduction of up to 1,500 roles, although every effort will be made to redeploy team members within the business where possible,” the retailer said.
Chief executive Damian McGloughlin said: “Launching a CVA has been a difficult decision and one that we have not taken lightly.
“Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs.
“The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead.”
The mechanism has been deployed by retailers including Carpetright, Mothercare and New Look this year.
Restructuring experts at Alvarez & Marsal, the professional services firm, will carry out the CVA, which will require the support of landlords.
Creditors will vote on the CVA on 31 August.
A total of 18 Homebase stores have already been shut this year and the business has also axed 303 jobs at its head office in Milton Keynes.
Sky News reported last week that the company was exploring store closures through the procedure.
Hilco Capital, which struck a deal to buy the DIY chain for £1 in May, has been working on the CVA since buying Homebase from Wesfarmers, the Australian group which paid £340m for it.
Prior to the Hilco takeover, Homebase had 250 stores at its peak and 12,000 staff.
From – SkyNews