Homebase given boost by recent good weather

Friday 26 July 2013 23.39
Homebase currently has 15 stores in Ireland
Homebase currently has 15 stores in Ireland

The recent spell of good weather has given an unexpected boost to the cash flow of DIY chain Homebase, the High Court has heard.

The court confirmed the appointment of an examiner to Homebase and extended court protection until 3 September.

The move followed the appointment of an interim examiner earlier this month.

The court was presented with an independent accountant's report and was told the interim examiner believed the company had a reasonable prospect of survival.

The examiner has received two expressions of interest in the business, the court was told.

The good weather, which coincided with the company entering examinership, had resulted in cash flow significantly improving over projections.

Cash flow had improved due to the sunny weather causing "a rush for garden equipment".

The High Court was told there were inter-company debts of €27.9m and €2.2m, but credit would continue to be provided throughout the examinership period from within the group.

The company, which is a subsidiary of British-owned Home Retail Group, currently operates 15 stores in Ireland, employing 558 full-time and part-time staff.

Sales at Homebase Ireland fell by 31% since 2009, and the business had been unprofitable for each of the last five years despite remedial action taken by management a previous court hearing was told.

Its ability to reduce costs had been restricted by the existence of "upward only" rent reviews on its store leases in Ireland.

The High Court confirmed the appointment of Kieran Wallace of KPMG as examiner to the business.

The company said its Irish stores would continue to trade as normal and that all customer orders, pre-payments, credit notes and gift vouchers would be "fully honoured".

The court was told at a previous hearing the business had a reasonable prospect of survival but "consideration will need to be given to closing non-viable stores".

Based upon both the current trading performance and forecast projections, it said it was proposing to close three of its 15 stores.