Homebase targets 15 revamped stores by year end

By James Davey LONDON (Reuters) - Homebase, Britain's second-biggest home improvement retailer, is seeing evidence of success from its costly store refit programme and aims to expand it to 15 of its outlets by year end. The company, owned by Home Retail Group Plc, aims to stand out in a crowded market with a refurbishment programme costing 1 million pounds per store and which it says boosts sales by around a fifth at each revamped outlet. "Clearly there's a lot of growth potential here," said managing director Paul Loft on a media visit to Homebase's Battersea store in southwest London. "Stores that are refitted are 20 percent better than they would have been if they weren't refitted," Loft said, noting that the online/multi-channel element of the business was growing more than five times faster than the overall business. Earlier this month Homebase posted an 11 percent rise in quarterly sales at stores open more than a year, following a three-year run of falling profits. It said the turnaround was mainly driven by sales of seasonal products which benefited from Britain's warm summer, but also partly reflected changes it has made to stores, products and customer service. Britain's home improvement market - where Homebase competes with the likes of Kingfisher's B&Q, market leader, and Travis Perkins' Wickes, is worth 35 billion pounds a year. So far Homebase has refitted nine stores and is targeting 15 by year end as part of a five-year investment programme. Parent Home Retail Group has projected capital spending of around 175 million pounds annually for the next three years, of which around 50 million is earmarked for Homebase. The Battersea store showcases key aspects of Homebase's refit and includes Laura Ashley and Habitat concessions, as well as more technology such as touch screens to aid customers' project decisions. Homebase said the analyst consensus for its profits in fiscal year 2014 is 15 million pounds, up from 11 million in fiscal 2013. Loft said a recent upturn in activity in Britain's housing market was yet to feed through to Homebase. "We see in our modelling of the business, as housing transactions move there's a six months lag into sales into our business," he said. (Editing by David Holmes)