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Homebase delivers 11.3% LFL sales growth in 2020

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.

VIEW HOMEBASE 2020 ACCOUNTS

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.

2021

  • 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”.

Finances

  • 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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