Home Retail begins store closures, agrees sale of freehold store

24th Nov 2014 08:38

Home Retail Group-owned Homebase has said it expects to see a small sales reduction thanks to the sale of a freehold store and initiation of a previously announced store closure programme.As a result of both the closures and the disposal, the group expects to see a reduction to sales of around 2% in the 2015 financial year and 3% in the 2016 financial year.The FTSE 250 group has agreed to sell its freehold store located in Battersea, London, for £57m cash consideration, of which £30m will be received in the current financial year ending 28 February, while the remaining £27m will be received on completion in the 2016 financial year.The deal, which is expected to complete in 12 months' time, will result in a gain on sale of around £38m, which will be recorded as an exceptional item once the sale has gone through.The sale is to a residential property developer, so Homebase will vacate the property shortly after the completion date.The group plans to close around 25 stores in the 2015 financial year as part of a previously announced wider programme of 80 store closures.Home Retail said the closures are not expected to have a material impact on its benchmark pre-tax profit in either the 2015 or 2016 financial years.It is currently negotiating on the closure of a small number of the stores.Closure costs are expected to be offset by existing property provisions."The cash outflow in the FY15 financial year as a result of these closures will be approximately £5m, which comprises a cash outflow of approximately £10m in respect of closure costs, partially offset by a cash inflow of approximately £5m in respect of a reduced level of working capital," it explained.