DIY chain Homebase has announced the closure of 42 stores, with up to 1,500 job losses, as part of a Company Voluntary Arrangement (CVA).

Owner Hilco Capital acquired the business for £1 from Australian Wesfarmers, which had owned it for two years and rebranded as Bunnings in line with its Australian and New Zealand DIY chain.

But the business experienced a significant decline in sales and profit, with Bunnings UK & Ireland reporting losses of £54million a year into the Wesfarmers ownership.

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The Homebase brand was reinstated with the acquisition of the business by Hilco Capital.

In addition, Homebase has reported weak consumer confidence and reduced spending has created a challenging retail environment.

It has concluded that its current store portfolio is no longer viable with unsustainable costs and many loss-making outlets.

Restructuring experts Alvarez and Marshall will carry out the CVA, which will allow Homebase to reduce its cost base, “providing a stable platform on which to continue its turnaround”.

All stores in the UK and the Republic of Ireland will remain open for business, as usual, and the process will have no impact on customer purchases, outstanding orders or any product and service guarantees.

CEO of Homebase Damian McGloughlin said: “Launching a CVA has been a difficult decision and one that we have not taken lightly.

“Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs.

“The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead.”

The creditors will vote on the CVA on August 31, 2018.

Founded in 1976, Homebase operates 241 stores across the UK and the Republic of Ireland and employs 11,000 people.