HomeZone will close its doors for the last time at the end of next month, with 14 employees impacted by the closure, as the economic downturn continues to take its toll.

The electrical and appliances division of the HWP Group had suffered a 60 percent decline in sales over the past two years, which combined with ever increasing costs of doing business in Bermuda - including the recently announced rise in the rate of payroll tax - had created an "unsustainable fiscal situation", according to HWP's CEO Jonathan Brewin.

But HWP has taken steps to try to retain as many of HomeZone's staff as possible within its main automotive business and to help them find alternative employment elsewhere.

HomeZone stopped taking new customer orders on Saturday and will cease trading for good on April 30, as will its department at Bermuda Shine on April 1.

Mr. Brewin said HWP, which employs about 150 employees, would now focus on strengthening its core business as the group shifted its business model and streamlined its overall operation.

"The past 12 months has seen significant change in this particular industry and has prompted us to reconsider our business model," said Mr. Brewin.

"We have made the decision to concentrate on our core business - transportation - and become a tighter and more consolidated operation.

"Whilst HomeZone has been a very successful company within the HWP portfolio, the decline in sales has caused us to take a tough business decision.

"In addition, with the commercial part of our appliance operation previously accounting for over 40 percent of sales, the slowdown in construction and new builds has also taken its toll."

Mr. Brewin said that HWP thought long and hard before making the decision, and despite HomeZone being innovative in regularly updating its product lines of ways of doing business, the rising cost of doing business on the Island, further exacerbated by the two percent increase in payroll tax which was announced in the 2010/11 Budget Statement, meant it was no longer financially viable to go on.

He added that the lack of new construction activity in Bermuda had also impacted 40 percent of the company's sales.

Mr. Brewin said that employers looking for extremely reliable and solid employees - many of whom were long-serving - including service technicians and administrators, were welcome to contact HWP to see about the possibility of taking them on.

"As a local employer in Bermuda, it is only as a very last resort that HWP made this decision and we are looking to keep as many employees as possible within the group," he said.

"This will not be possible in all cases and our top priority right now will be to assist all of those affected by this business decision to secure alternative employment."

HomeZone, which has had a business agreement with General Electric for more than 50 years, as well as the likes of Whirlpool, will continue to honour its existing warranty agreements while it completes the shutdown process.

Tom Nelmes, vice-president of the electrical division at HomeZone, said: "It is our priority to ensure our customers receive the after-sales service that they need.

"We are currently putting into place the necessary arrangements and will inform our customers accordingly during the next few weeks."

HWP is currently seeking new tenants to fill the space occupied by HomeZone at its Serpentine Road premises.

Any employers interested in taking on HomeZone employees can contact Jocene Wade at 298-0194 or email jocene.wade@hwp.bm