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Homebase will close a quarter of its 323 branches in the next three years, blaming an excess of retail space at out-of-town stores and the rise of a generation with little interest in DIY projects.
The chain's parent, Home Retail Group, said about 30 Homebase branches would close in the current financial year with further closures by the end of 2017-18, taking the total to about 80.
John Walden, Home Retail's chief executive, said the closures would cause job losses but declined to discuss numbers, saying that Home Retail had a good record of finding staff other jobs.
Walden said Homebase suffered from inconsistent standards at stores and low sales for the size of its network. The chain's online business lags behind other retailers and needs investment, he added.
Homebase and rival DIY retailers such as B&Q suffered during the financial crisis as house prices fell and property sales ground to a halt. The housing market roared back into life last year but Walden said Homebase had failed to feel the full benefit, partly because consumers have less time and enthusiasm for DIY and are more likely to pay a tradesman to do jobs about the home.
Home Retail said: "Although economic indicators have more recently improved, several structural factors continue to affect home improvement retailing, including an excess of retail space, the rise of a generation less skilled in DIY projects, and the growth of non-traditional digital and multi-channel competitors."
Walden took over in March after running Argos for two years and promised a review of the business. Homebase has failed to keep up with progress at Argos, which has reinvented itself as a click-and-collect retailer that lets customers order online and pick up goods at stores.
In future, customers may be able to order products from Homebase on the internet and pick them up at Argos stores, Walden said. The businesses will also share data and knowledge to get Homebase up to Argos's online standards, he added.
Homebase's first-half sales at stores open a year or more rose 4.1% but at a slower pace than the 5.9% a year earlier. Operating profit barely rose to £27.8m from £27.2m in Homebase's busiest period. Argos's first-half operating profit rose to £12m from £7.7m.
Most of Homebase's stores are at large out-of-town sites such as those where Tesco and other supermarkets are losing sales. Home Retail's finance director, Richard Ashton, said Homebase was not afflicted by the same problems because its customers did not have the same opportunity to shop locally.
After rumours circulated that Walden wanted to sell Homebase, he said a deal was not on the cards. "Our commitment to Homebase through this plan would suggest we are all in on Homebase and are going to do our best to make it a great business," he said.
Paul Loft, who has run Homebase for nine years, will leave the group when a replacement is found. "It made sense to both of us that now was a good time to step down," Walden said.
Group pre-tax profit for the six months to the end of August fell to £13.5m from £14.2m a year ago.
Home Retail shares fell 2.7% to 171p.
