The firm has booked a non-cash impairment of £454m since acquiring Homebase, and BUKI is also expected to report an underlying loss before interest and tax of £97m.
Wesfarmers said between 20 and 40 Homebase stores could be closed and the possibility of selling off BUKI completely has not been ruled out.
Homebase employs 12,000 people in the UK and has 250 stores. Wesfarmers has not said what will happen to the employees whose jobs may be at risk.
Wesfarmers managing director Rob Scott said: “We need to address underperformance in our portfolio that is detracting from positive performance in other areas, and the announcement today sets out decisive actions to achieve this.
“The Homebase acquisition has been below our expectations which is obviously disappointing. In light of this, a review of BUKI has commenced to identify the actions required to improve shareholder returns.”