Jun 24, 2011
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Home Retail swoops for Habitat brand

Jun 24, 2011

June 24 - Home Retail , Britain's No.1 household goods retailer, has purchased the Habitat home furnishings brand after the firm was placed into administration, seeking to address a slump in sales by diversifying its product offer.

Habitat autumn/winter collection

The owner of catalogue-based chain Argos and do-it-yourself retailer Homebase said on Friday it had paid 24.5 million pounds ($40 million) for the brand, started by Terence Conran in 1964, to Habitat UK's administrator Zolfo Cooper.

Home Retail has acquired rights for the exclusive use of the Habitat brand, its brand designs and intellectual property in Britain and Ireland. It has also bought the Habitat UK website, three London stores and certain brand support functions.

Chief executive Terry Duddy said Habitat products would be introduced across the group, including a number of concessions in Homebase stores.

Earlier this month, Home Retail said worried shoppers had cut purchases of electrical goods, adding to concerns of a fresh downturn in consumer spending as government austerity measures bite.

Analysts said it was logical for Home Retail to buy brands from failed retailers, just as it did when acquiring Chad Valley from Woolworths and Schreiber from MFI.

"Will this make a blind bit of difference to Argos's calamitous like-for-like sales decline, given the pressure on big-ticket consumer spending? The answer is no," said Arden Partners analyst Nick Bubb.

"Any sales boost in the past from launching own-label brands has simply been lost in the wash, because core ranges like TVs, furniture and video games have not sold well."

Home Retail shares were down 2.2 percent at 157.8 pence at 1136 GMT, valuing the business at about 1.34 billion pounds.

The stock, which has lost nearly a quarter of its value over the past month, was hit by a downgrade from Singer Capital Markets, which slashed its 2011-12 profit forecast by 22.5 percent and predicted a halving of the dividend.

Habitat UK was placed into administration by Hilco UK, the retail restructuring specialist, which purchased Habitat in 2009 from Ikea owners, the Kamprad family.

Zolfo Cooper plans to continue to trade the 30 remaining UK stores while it talks to interested parties.

Hilco said it was in talks with "a major European listed business" for the sale of the profitable European arm of Habitat, which has 27 stores in France, six in Spain and five in Germany.

(Editing by Mark Potter and Jon Loades-Carter)

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