Sainsbury’s to acquire Derry Homebase store to convert into supermarket

J Sainsbury plc (“Sainsbury’s”) has reached an agreement to acquire ten leasehold stores from HHGL Limited, trading as Homebase, for conversion into Sainsbury’s supermarkets. The transaction is expected to complete in early September.

A key ambition of our Next Level Sainsbury’s plan is to offer more food choice to more customers. The acquired stores are in key target locations that will grow Sainsbury’s supermarket coverage across England, Northern Ireland and Scotland, bringing Sainsbury’s quality and value to new customers and communities.

Among the ten stores acquired by Sainsbury’s is the Homebase store at Crescent Link in Derry’s Waterside. Sainsbury’s already have a superstore located on the cityside at Strand Road.

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 our supermarket trading space. The addition of new locations means nearly 400,000 more people will be within a 10-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.

We expect the stores to achieve strong returns, with return on capital employed in the low teens, comfortably in excess of Sainsbury’s cost of capital. We will open the first of these stores next summer and we aim to complete the conversion of all sites by the end of calendar year 2025, with capital expenditure relating to acquisition and fit-out costs incurred across financial years 2024/25 and 2025/26.

The gross investment value of the acquisition, being the total capitalised cost of leases, acquisition premium and fit-out costs, is expected to be approximately £130 million.

Our free cash flow targets remain unchanged; we continue to target delivery of at least £500 million retail free cash flow in financial year 2024/25 and at least £1.6 billion retail free cash flow over the three years to financial year 2026/27.

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 who are placed at risk of redundancy as a result of this transaction.

Simon Roberts, Chief Executive Officer, J Sainsbury plc 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’s winning us customers from all our key competitors and driving consistent growth in volume market share. We want to build on this momentum which is why we are growing our supermarket footprint. Our ambition is to be customers’ first choice.”