Home Retail Group has confirmed that it has bought some parts of Habitat UK for £24.5m, but the rest of the business has entered administration.

The owner of Argos and Homebase has bought the rights for the exclusive use of the Habitat brand, its design brands and intellectual property in the UK and Ireland. It has also acquired the UK website, three of its London stores and certain brand support functions.

Habitat owner Hilco said trading conditions have been challenging in the furniture sector and when it bought Habitat in 2009 it had posted losses of E100m over three years. Since then it has reduced losses and installed a new management team.

However, it said a return to profitability remains unlikely as many stores are expensive and poorly located. As a result Habitat has appointed Fraser Gray from Zolfo Cooper as administrator.

Habitat has 33 shops in the UK and a head office in London, employing 194 staff.

The stores which Home Retail did not buy will continue to trade while the administrator talks to interested parties. Property agents Harper Dennis Hobbs has been appointed to deal with the store disposals.

Habitat executive chairman Phil Wrigley said: ““The sale of the brand and three flagship stores to Home Retail Group secures the future of Habitat and will enable the business to move forward in the UK with the benefit of the group’s multi-channel strength.”

Hilco also confirmed it is in advanced talks with a European listed business - thought to be Conforama - for the sale of the profitable European arm. Internationally it has 27 stores.

Terry Duddy, chief executive, Home Retail Group said: “The style led credentials of the Habitat brand, with its strong heritage, will be a significant addition to the Group’s portfolio of own brands.  In addition to operating the three London stores and the UK website, we will introduce Habitat products across the Group including a number of concessions in Homebase stores.  We will also look to develop the online proposition leveraging the award-winning multi channel strength of Home Retail Group.”