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Homebase faces significant asset write-down

Published: 16 September 2008
Home Retail Group to write down 'hundreds of millions' of pounds on value of assets at DIY giant to reflect poor trading conditions.
Homebase faces significant asset write-down
The decision follows the release of Home Retail Group's second quarter trading statement, which revealed a decline of sales across Argos and Homebase, which both form part of the Group's portfolio.

It is reported that some analysts in the market have reduced their estimate of Homebase's asset value to as little as £100m - a significant drop on the £900m Home Retail Group paid for the business in 2002.

The company does not appear surprised at the substantial drop in its valuation, especially since £750m of asset worth is goodwill.

Auditors are currently assessing the extent of the situation before deciding on the level of the write-down, which will be revealed in half-year results on October 22.

Home Retail Group chief executive Terry Duddy said: "We know it's going to be hundreds of millions."

He added: "It's not a balance sheet issue - it's goodwill, not cash and it doesn't have an impact on the operating profit. It's not about this quarter; it's about a more bearish view of or a more realistic view of what's coming in the next couple of years.

"What we have seen in the retail sector is that values have dropped substantially over the last year or two. It's hard to argue with the auditors that the business is worth what it was a year ago."

  • After almost six months of delay, Homebase has announced that it is finally set to open its new store in Norfolk. The outlet in Holt Rd, Cromer will open its doors to the public on Friday, October 17.
  • The opening of the store was delayed after North Norfolk District Council refused planning permission for a 9.6m water tank in March this year.
    The shop boasts 25,000sq ft of shop floor space, including 7,500sq ft devoted to gardening products.


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