Homebase has provided a trading update for the year to 27 December 2020, reporting that their turnaround is successfully completed, and they are now into a three year growth plan. In 2020, they generated £61m of EBITDA (before exceptionals), like for like sales growth was +11.3%, gross margin showed strong improvements by 2.6%, and they had a cash balance of £84.7m at year end.
2020 Review – Summary (all extracted from the Homebase 2020 accounts)
EBITDA before exceptionals of £61m compared to £4.1m in 2019
This ‘marks the conclusion of the … turnaround strategy that started in June 2018 and the beginning of a three year growth plan”
Like for like sales were up 11.3% and gross margin improved by 2.6%
The year ended with 135 stores trading with 11 stores closing during the year
Stores were shut for six weeks over the crucial Easter trading period in March/April 2020.
Turnover was £738.1 down by -4.9% from £775.8 in 2019.
During the pandemic the business accessed the Job retention scheme, business rates relief and deferred VAT payments (the VAT payments will be repaid by January 2022).
In June 2020, the company concluded the CVA with 99.8% of creditors voting in favour.
A potential sales process was initiated towards the end of 2020. “It is not intended that the strategy should change if a new owner is found. Should a suitable partner not be found the Company will continue on its current growth path with the existing owners.”
2020 Format Review
Since May 2020, customer demand has been strong in key ranges.
Over 5,500 new products launched in 2020.
New partnerships formed with House beautiful and Country Living across kitchens, furniture and garden structures.
In September 2020, a new partnership was signed with The Hut Group to provide the online offer and a new website launched in March 2021.
During 2020, two new store format high street stores were opened: “Decorate by Homebase” and “Homebase Kitchens and Bathstore”
By the end of 2020, 104 Homestore stores had the Bathstore format fitted.
Kitchen & bathroom showrooms were closed for part of the year due to Covid restrictions, impacting the traditionally strong sales period of January & February.
“Despite the third national lockdown … the Company has been able to meet the budget it set”.
At 27 December the Group had net assets of £116.1m (2019: £71.4m) and a cash balance of £84.7m (2019: £17m).
The company has a debt facility from Wells Fargo that runs until November 2021 of £95m at peak trading. Negotiations are underway to extend access to liquidity should it be required. The Group has access to a further £25m standby debt facility. Maximum utilisation in 2020 was just over £36m.
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