Up to 40 Homebase stores could be closed by its Australian owner, putting up to 2,000 jobs at risk.
But after a “disappointing” performance the Australian firm has put Homebase under review and expects it to lose £97m in the first half of 2018.
UK retailers are struggling in the face of rising inflation and fragile consumer confidence.
Several store chains have announced job cuts recently, including supermarket giants Tesco, Sainsbury’s, and Asda.
Homebase’s rival, B&Q, last week said it was cutting 200 jobs at its head office in Hampshire as part of a cost-cutting drive.
Wesfarmers said it had written down the value of the Homebase chain by £454m as a result of its poor trading. Wesfarmers managing director, Rob Scott, commented: “The Homebase acquisition has been below our expectations which is obviously disappointing.
The company will announce the result of its review in June, so staff will have to wait until then to find out which stores are to close. However, the Australian firm said it had been encouraged by the performance of stores that had begun trading under the Bunnings name.
Homebase has 250 stores across the UK and employs 12,000 people.