15:42, Monday 12 September 2011

* Launches Home of Style (Berlin: TFK.BE – news) own-brand interiors range of 2,500
items

* Aims to capture former customers of collapsed rival Focus
DIY

* Expects to revamp around 150 mezzanines over three years

* To trial selling carpets and new services like decorating

(Adds more quotes, detail, background)

AYLESFORD, England, Sept 12 (Reuters) – Homebase, Britain’s
second-biggest home improvements retailer behind Kingfisher (Euronext: KFR.NX – news) ‘s
B&Q chain, plans to step up its focus on decorating and
services as it battles to win share in a struggling marketplace.

The chain, owned by Home Retail Group (EUREX: HOMF.EX – news) , said on
Monday it was launching a range of own-brand interior decorating
products called Home of Style and it would test new product
areas like carpets, as well as offering services such as
painting and decorating and lawn maintenance.

Managing Director Paul Loft said it was aiming to capture
former customers of Focus DIY, which collapsed earlier this
year, and differentiate itself more clearly from B&Q, which also
aims to appeal to tradesmen.

“We believe this business has got clear recovery potential,”
he said on a tour of a store in Aylesford, southeast of London,
which has been rebuilt following an arson attack in May 2010.

“Some of that is contingent on the marketplace and the
economy, obviously. But … we’re developing new ways of
investing in the business that means when the change in the
economy comes we will be well-placed and we should be able to
grow significantly.”

Many British retailers, particularly those focused on “big
ticket” areas of spending like kitchens and bathrooms, have been
hit hard as shoppers cut back amid rising prices, muted wages
growth, government austerity and a fragile housing market.

Homebase last week reported a 3.1 percent fall in
second-quarter sales from stores open over a year.

Spokesman Chris Wermann said the chain’s revamp would be
funded from within Home Retail’s existing 150 million pounds
($238 million) a year of capital spending.

It will include improving ranges, like mirrors, across its
342 stores in Britain and Ireland (Berlin: IIK.BE – news) , and upgrading around 150
mezzanine floors focused on “big ticket” areas of spending over
three years at a cost of about 500,000 pounds apiece.

Full store upgrades will require more experimentation, Loft
said, adding Homebase had hired design consultant Dalziel and
Pow to help it refurbish a store in Maidenhead, west of London,
which will be completed around spring 2012.

At the Aylesford store, Homebase has reduced selling space
for repair and maintenance products to make room for more
decorative ranges, and also harnessed new technologies, such as
a touch-screen planner that allows shoppers to upload pictures
of their rooms and see how they would look in different colours
and with different furnishings.

The new Home of Style range will include 2,500 products
spread across departments like lighting, cooking and bathrooms.
It will be complemented by more upmarket ranges in kitchens and
bedrooms, as well as products next year from the Habitat UK
furniture brand which Home Retail bought earlier this year.

To be a “one stop shop” in decorating, Homebase would look
at selling carpets and rugs, Loft said, despite particularly
tough trading in those markets, with industry leader Carpetright (Xetra: 904879 – news)
issuing a string of profit warnings.

“Clearly we need to find a way of making money in carpets,”
Loft said, adding Homebase was so far only testing selling
carpets at one store in Watford, north of London.

Homebase made an operating profit of 47.6 million pounds on
sales of 1.55 billion in the year ended February, accounting for
about 19 percent and 26 percent of Home Retail’s total profits
and sales respectively.

Kingfisher is due to report first-half results on Thursday.
($1=0.629 pounds)

(Editing by Greg Mahlich and Jane Merriman)