Fundamentals of Business

Homebase cuts 5 550 jobs

Sainsbury's is to cut 550 jobs at its Homebase DIY stores. The job losses are part of an efficiency drive at the group which will see it pull out of the fitted kitchen business and close its 99 in store kitchen departments.
The cuts come on top of 1,300 job losses already announced at Sainsbury's food stores and at the group's Savacentre headquarters. Sainsbury's, whose supermarket division recently slipped from second in the rankings, said the cuts were part of an overall efficiency programme for Homebase designed to save £30m over three years.

Wider review the programme, outlined in June, and is aimed at boosting sales per square foot and reducing its cost base. Homebase's kitchen business had been forecast to lose around £5m this year. Floor space created with the closing of the kitchen departments will be taken up by expanding the flooring department, selling rugs and tiles.

The company said the job cuts would not fall exclusively on those currently working in the kitchen departments, as many would be transferred to other posts.
But the wider review of the 228 Homebase stores will see a whole layer of management stripped from the business, with "nonvalue- adding" jobs being axed.

Profit boost

David Bremner, chairman of Homebase, said: "These actions underscore our commitment to produce increased profits from our existing assets." Although the cuts are forecast to boost profits in the medium term, the short term cost is likely to be around £15.5m. Redundancy costs are expected to be £6.5m, with a further £9m for kitchen department closures.
Problem
long conversion cycle - manufacturing - cash flow problems.