Exit after brief intermezzo

In their study "UK DIY. Big bets placed - who will win?" the corporate consultancy mdj2 analyses the British market - and the hot topic Homebase. Here is an extract:
Just over two years after it acquired Homebase, Bunnings-parent company Wesfarmers has sold it to Hilco for just GBP 1 and the existing Bunnings-branded stores will be converted back to the Homebase brand (assuming they are kept in the portfolio), ending another example of an unsuccessful international expansion by a retailer with a leading brand in its domestic market.
From a financial performance perspective the results in the six months to December 2017 were far worse than many sceptics would have predicted: losses of GBP 97 mio, sales decline of -15.7 per cent, write-down of the investment in Homebase by AUD 931 mio (ca. GBP 540 mio).
While the market conditions (including bad weather) did not help Q1 2018 performance (like-for-like sales -15.4 per cent, total sales -13.5 per cent), Wesfarmers management have admitted that the losses have been mainly self-inflicted.
Because the new Bunnings management in 2016 decided to "exit" from the existing Homebase proposition pretty much immediately (new EDLP-based pricing strategy, exit "soft" categories, reduce exposure to Big Ticket categories including stopping installations), the challenge was always going to be how quickly Bunnings could establish a successful new format, while minimising the inevitable reduction in performance from the remaining Homebase-branded stores.

We are well aware of the low "price elasticities" (change in sales volumes as a result of changes in pricing) on many DIY products and Bunnings reduction in Homebase prices and switch from 'hi/low' to EDLP pricing will have had a drastic impact on what was already low profitability at Homebase.
Store standards and stock availability had noticeably improved but under Bunnings control, there was a limit to what could be done given how fundamental the dismantling has been of so many core aspects of the old Homebase operating model. At least Homebase pre 2016 had a clear proposition that was differentiated from those of B&Q and Wickes.
At the time of writing it is too early to say with any certainty what the new owners will do with the business. One of Hilco's success…