Homebase Ireland incurs €1m loss due to covid-19 subsidy repayment and closure of Limerick store

Numbers employed at Homebase in Ireland reduced from 267 to 247 and staff costs declined from €5.95m to €5.87m.

Costs associated with the closure of Homebase’s Limerick store and the firm repaying covid-19 wage subsidy payments resulted in the Irish arm of Homebase recording €1m pre-tax losses in 2022.

New accounts show that Homebase firm, HHGL (ROI) Ltd, recorded the €1m pre-tax loss after revenues slumped by €12.4m or 21% from €58m to €45.59m in the 12 months to the end of January 1, 2023.

The dip in revenues at the home improvement and garden product retailer coincided with the closure of its Limerick store in the last quarter of 2022. The firm shut down its Limerick store in October 2022 and the company recorded exceptional costs of €623,000 under the heading of 'property and store closure related costs’. 

A note states that following the closure of the Limerick store, store closure costs were provided for as exceptional charges in the period. The firm also incurred a €415,000 cost through a fixed-asset impairment charge as part of the €1m exceptional cost.

In addition, the company incurred a €511,000 cost as during the year, HHGL (ROI) Ltd repaid that amount which was received in the prior year in the form of assistance from the Government here in respect of the job retention scheme as a consequence of covid-19.

Before the exceptional cost of €1.03m is taken into account, the company recorded a modest operating profit of €32,000 for the 12 months to the end of January 1, 2023. The operating profit of €32,000 followed an operating profit of €1.3m in the prior year.

Directors state that the business achieved a gross margin of 45.5% during the year “and the gross margin rate reduced 7.6 percentage points year on year, mainly due to the impact of rising inflation and higher freight costs”.

The directors also say: “The Homebase team have pulled together through a challenging year driven by external market conditions and a turbulent global political landscape to really drive success and help reinforce Homebase’s position as the Home and Garden experts.” They state that “this has been achieved through the sourcing of new innovative products, great team support and improving the shopping experience for customers”.

They state that the cost-of-living crisis “continues to be an ongoing challenge” in Ireland.

Numbers employed reduced from 267 to 247 and staff costs declined from €5.95m to €5.87m. Lease costs totalled €5.09m while non-cash deprecation costs amounted to €410,000.

In a post balance sheet event, the accounts state that “in 2023 a corporate simplification exercise took place to remove eight intermediate holding companies from the wider Group structure to improve transparency and reduce administrative costs going forward”. The note states that as a result of the simplification process, the company’s immediate parent and the ultimate ownership of the Group has not changed.

At the end of January 1, 2023, the firm had a shareholders’ deficit of €8.45m. Cash funds reduced from €2.09m to €1.73m.