Sainsbury’s has reached an agreement to acquire ten leasehold stores from HHGL Limited.
HHGL Limited, trading as Homebase stores, will be converted into Sainsbury’s supermarkets. The transaction is expected to be completed this month.
A key ambition of the Next Level Sainsbury’s plan has been offering more food choices to customers. The acquired stores have been in crucial target locations that will grow Sainsbury’s supermarket coverage across England, Northern Ireland and Scotland.
Once they are converted, the shop floor area of the stores will range from approximately 15,000 to 40,000 square feet and will add a total of around 235,000 square feet to the supermarket trading space.
"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, winning us customers from all our key competitors and driving consistent growth in volume market share,” said Simon Roberts, Chief Executive Officer, J Sainsbury plc.
“We want to build on this momentum, so we are growing our supermarket footprint. Our ambition is to be customers’ first choice for food, and these new stores will showcase some of the best that Sainsbury’s supermarkets offer to even more communities around the country.”
Adding new locations means nearly 400,000 more people will be within a ten-minute drive of a Sainsbury’s supermarket. The new stores will showcase Sainsbury’s latest food offer with a refreshed, innovative look and feel and excellent sustainability credentials.
Sainsbury’s has expected these stores to achieve strong returns, with a return on capital employed in the low teens, comfortably over Sainsbury’s cost of capital. The new stores will be open next summer, and the conversion of all sites will be completed by the end of the 2025 calendar year.
Capital expenditure relating to acquisition and fit-out costs will be incurred across financial years 2024/25 and 2025/26. The gross investment value of the acquisition, which includes the total capitalised cost of leases, acquisition premium, and fit-out costs, is expected to be approximately £130 million.
The free cash flow targets remain unchanged. Sainsbury’s has continued to target delivery of at least £500 million retail free cash flow in the financial year 2024/25 and at least £1.6 billion retail free cash flow over the three years to the financial year 2026/27.
The Homebase stores Sainsbury’s is acquiring are:
Homebase Birmingham Sutton Coldfield
Homebase Bromsgrove
Homebase Cromer
Homebase Derry/Londonderry
Homebase Fareham
Homebase Inverurie
Homebase Lowestoft
Homebase Newark
Homebase Omagh
Homebase Rugby
The conversion of these sites into supermarkets is expected to create approximately 1,000 new Sainsbury’s roles. Sainsbury’s will guarantee an interview for any Homebase colleagues at risk of redundancy due to this transaction.
