Home Retail’s future has been debated for years. Are Argos and Homebase natural bedfellows? Is their combined buying power adequately leveraged?

What it comes down to is whether they would operate better alone. Both businesses have had their problems in recent years, but Argos has emerged as the triumphant sibling.

Homebase_Guildford

Homebase_Guildford

 Nicholas Marshall is the latest DIY boss to express interest in buying Homebase

Although it has suffered trading wobbles, which last month prompted a profit warning, Argos is the clear leader when it comes to multichannel innovation – a pillar for any successful retailer today – and many in the City have suggested it would be more successful flying solo.

But what would happen to Homebase if it was set adrift? Would there be an appetite from buyers to acquire the second-best retailer in a challenged market?

Acquisition interest

As it happens, there’s been no shortage of seasoned DIY bosses who have sniffed around Homebase in the past, believing they can revitalise its fortunes after a lacklustre history playing second fiddle to B&Q.

Today we learned Nicholas Marshall quite publically entered the fray. The former boss of the Garden Centre Group has revealed he is in talks with private equity groups about acquiring Homebase, although no deal has been tabled yet.

“A retailer with Nicholas Marshall’s background could do well at Homebase, which has traditionally had a strong gardening offer”

Nicola Harrison

A retailer with Marshall’s background could do well at Homebase, which has traditionally had a strong gardening offer. And Marshall is used to working with private equity firms – he was leading Garden Centre Group when it was sold to Terra Firma in 2012.

Of course, Marshall’s musings may come to nothing, but they do provide us with the opportunity to imagine what life would be like for Homebase under new ownership. What action could be taken to ensure it is better placed to take on B&Q?

Home improvement

A stronger focus on multichannel perhaps, and efforts to better leverage its more female-friendly focus, given most purchasing decisions for the home are made by women. And any private equity owner would certainly look to improve Homebase’s profitability, which lags considerably behind that of B&Q.

Echo Lu

Echo Lu

Homebase managing director Echo Lu

But credit where it’s due; Homebase hasn’t been doing too badly in recent times, with profits and like-for-likes up in its first half to August 29. And its strategy to shutter underperforming – and cost intensive – stores is undoubtedly sensible.

Echo Lu, a well regarded former Tesco executive, has not yet been in the managing director role eight months and it would perhaps be a missed opportunity if any ownership change also came with a switch in leadership.

But Homebase is far from being in bloom, and new owner or not, Lu is under pressure to unveil her vision for the business to reassure investors that it can carve out a more differentiated offer in what is fast becoming a troublesome market.

  • Nicola Harrison is content editor at Retail Week