Sainsbury’s invests £130m to buy ten Homebase stores in the UK

Sainsbury’s has bought a portfolio of ten Homebase stores, which it plans to convert into new supermarkets across the UK as part of a £130m investment.

The stores are located across England, Scotland and Northern Ireland, and when they open, 400,000 Britons will live within a 10-minute drive of a Sainsbury’s supermarket.

Sainsbury’s said the stores will range in size from 15,000 to 40,000 sq ft each, adding a total of around 235,000 sq ft to its overall estate and creating around 1,000 new jobs.

The food-focused stores will also have “a fresh, innovative look and feel and excellent sustainability credentials,” the group said.

Sainsbury’s has been gradually increasing its UK grocery market share this year and is on track to post underlying retail operating profit of between £1.01bn and £1.06bn by 2024, representing annual growth of 5-10 per cent.

At its capital markets day in February, the group pledged a target of £1bn in cost savings over three years and to boost growth in food sales volumes.

Sainsbury’s said on Thursday that its newly acquired stores are in “key locations”, bringing “Sainsbury’s quality and value to new customers and communities”.

He added: ‘We expect the stores to deliver strong returns, with a return on capital employed of around 15%, well above Sainsbury’s cost of capital.

‘We will open the first of these stores next summer and our goal is to complete the conversion of all sites by the end of calendar year 2025.’

The purchase and refurbishment of the new sites is expected to cost around £130m.

Sainsbury’s boss Simon Roberts said: ‘Sainsbury’s food business continues to go from strength to strength as we push ahead with our Next Level Sainsbury’s plan.

‘We have the best combination of value and quality in the market and that allows us to win customers from all our key competitors and drive consistent growth in volume market share.

‘Our ambition is to be customers’ first choice for food and these new stores will showcase the best that Sainsbury’s supermarkets have to offer to even more communities across the country.’

Sainsbury’s shares rose 0.6 percent to 290.6 pence by mid-afternoon on Thursday, bringing year-over-year gains to around 8.9 percent.

Clive Black, equity analyst at Shore Capital, said the move indicated “Sainsbury’s growing capability and confidence in the UK grocery sector”.

He added: “A competitive but rational market represents a good continued opportunity for Sainsbury’s and we believe shareholders should be pleased with this performance.”

Where are the new stores?

The location of the ten stores that Sainsbury’s has bought from Homebase:

England

• Bromgrove
• Birmingham Sutton Coldfield
• Cromer
• Farnham
• Lowestoft
• Newark
• Rugby

Northern Ireland

Scotland