BREAKING NEWS : Former neighbor charged with murder of Wilma Ball Full Story

Australian company loses $1 billion on UK retail investment

A badly timed bet on the UK retail sector has cost one big Australian company $1 billion.Wesfarmers ...

Posted: May 25, 2018 12:57 PM
Updated: May 25, 2018 12:57 PM

A badly timed bet on the UK retail sector has cost one big Australian company $1 billion.

Wesfarmers said Friday that it was selling British home improvement chain Homebase at a huge loss, just over two years after it bought it.

Wesfarmers -- which owns supermarkets, hotels and chemicals plants -- paid -340 million pounds (about $470 million at the time) for Homebase in February 2016. It's now offloading it for a "nominal amount" to Hilco Capital, an investment firm that specializes in restructuring struggling companies.

Wesfarmers Managing Director Rob Scott admitted during briefings with reporters and analysts Friday that the disastrous foray into UK retail had cost it about $1.3 billion Australian dollars ($1 billion) when all the losses from Homebase were added up.

Scott blamed Britain's flagging retail sector.

"From the point we bought Homebase to where we sit now, there has been a dramatic deterioration in the UK macro and retail environment," he said.

Bricks-and-mortar retailers in the UK have struggled since the country's vote to leave the European Union almost two years ago.

The British pound dropped dramatically following the vote, making it more expensive for retailers to purchase goods from abroad. That has translated into higher prices for consumers, and growth in the wider economy has slumped.

Related: UK economy grinds to a halt

The industry has been rocked by the collapse of household names like Toys "R" Us and electronics chain Maplin, and thousands of retail jobs have been lost.

Homebase currently has about 230 stores across the United Kingdom and employs 12,000 people.

But some analysts accused Wesfarmers of failing to adequately assess the risks before entering the UK market.

During a conference call with executives from the Australian company on Friday, Bank of America Merrill Lynch analyst David Errington called Homebase "a very poor investment" and called for Wesfarmers' board to be held accountable.

"There's got to be penalties for losing such a large amount of money in such a short space of time," he added.

In response, Scott said that the company had been transparent about the problems with the deal and that managers' pay would be affected by the losses.

The company admitted in its statement that "poor execution" of the Homebase deal was a key part of the problem.

Wesfarmers may at least get the opportunity to claw back some of its losses one day. The deal with Hilco Capital includes a clause that the Australian company gets 20% of any proceeds from a future sale of Homebase.

-- Ivana Kottasov- contributed to this report.

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 775686

Reported Deaths: 14025
CountyCasesDeaths
Marion1066871814
Lake572681031
Allen43500701
Hamilton37653427
St. Joseph37508568
Elkhart29882471
Tippecanoe23732232
Vanderburgh23634405
Porter19690327
Johnson19020394
Hendricks18271323
Clark13730199
Madison13719348
Vigo12949256
Monroe12691180
LaPorte12645225
Delaware11218198
Howard10832237
Kosciusko9851124
Hancock8855150
Bartholomew8343157
Warrick8216157
Floyd8128183
Grant7457181
Boone7289105
Wayne7273201
Morgan6988143
Marshall6376117
Dubois6327118
Cass6130112
Noble607391
Dearborn605878
Henry6001111
Jackson520977
Shelby514898
Lawrence5020128
Gibson471697
Montgomery464792
Clinton462755
DeKalb461485
Harrison459277
Huntington429082
Whitley421045
Steuben414561
Miami411573
Jasper403957
Knox397291
Putnam388762
Wabash373884
Adams358956
Ripley354571
Jefferson351487
White341854
Daviess3110100
Wells305981
Greene298485
Decatur294393
Posey288235
Fayette287764
Scott285458
LaGrange278873
Clay277649
Washington257638
Randolph248583
Jennings243349
Spencer240531
Fountain239050
Starke231559
Owen226759
Sullivan224143
Fulton210446
Jay204132
Carroll200623
Orange194456
Perry193139
Vermillion183444
Rush179127
Tipton174348
Franklin173935
Parke157816
Pike144034
Blackford138732
Pulaski124748
Newton124137
Benton111615
Brown106743
Crawford106716
Martin92715
Warren88715
Switzerland8568
Union73910
Ohio58711
Unassigned0429

Ohio Coronavirus Cases

Data is updated nightly.

Cases: 1132798

Reported Deaths: 20530
CountyCasesDeaths
Franklin1312911496
Cuyahoga1180592268
Hamilton830231263
Montgomery541901064
Summit491891018
Lucas43982835
Butler40324615
Stark34056941
Lorain26232511
Warren25125312
Mahoning22881614
Lake21602397
Clermont20592261
Delaware19295138
Licking16977227
Fairfield16959207
Trumbull16940493
Medina16019278
Greene15721254
Clark14439309
Portage13548219
Wood13411201
Allen12124245
Richland11870214
Miami11140229
Wayne9344228
Columbiana9282236
Muskingum9207137
Pickaway8796123
Marion8774140
Tuscarawas8756257
Erie8220166
Ashtabula7318180
Hancock7080135
Ross7070165
Geauga7032153
Scioto6887108
Belmont6261179
Lawrence6033106
Union595149
Jefferson5787162
Huron5678122
Sandusky5536130
Darke5476131
Seneca5391128
Washington5391111
Athens528660
Auglaize510587
Mercer492885
Shelby487798
Knox4678112
Ashland450198
Madison450066
Defiance444599
Fulton443275
Putnam4366104
Crawford4152112
Brown414163
Preble3988107
Logan396379
Clinton395667
Ottawa378281
Highland370768
Williams361878
Champaign351760
Guernsey334054
Jackson324954
Perry300550
Morrow298544
Fayette291350
Hardin280465
Henry279067
Coshocton275161
Holmes2735102
Van Wert254465
Gallia254150
Adams253658
Pike247137
Wyandot236557
Hocking224163
Carroll203349
Paulding181542
Meigs153940
Monroe139446
Noble138739
Harrison115738
Morgan112024
Vinton88217
Unassigned04
Fort Wayne
Partly Cloudy
62° wxIcon
Hi: 83° Lo: 56°
Feels Like: 62°
Angola
Mostly Cloudy
68° wxIcon
Hi: 81° Lo: 56°
Feels Like: 68°
Huntington
Clear
60° wxIcon
Hi: 81° Lo: 53°
Feels Like: 60°
Decatur
Clear
62° wxIcon
Hi: 83° Lo: 55°
Feels Like: 62°
Van Wert
Partly Cloudy
60° wxIcon
Hi: 84° Lo: 55°
Feels Like: 60°
The heat and humidity builds into the region as we head into the weekend.
WFFT Radar
WFFT Temperatures
WFFT National

Community Events