REG - Sainsbury(J) PLC - Acquisition of 10 Homebase stores

J SainsburyAnnouncement

29/08/2024 11:00

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RNS Number : 1660C  Sainsbury(J) PLC  29 August 2024

29 August 2024

J SAINSBURY PLC

ACQUISITION OF 10 HOMEBASE STORES

J Sainsbury plc ("Sainsbury's") has reached an agreement to acquire 10
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.

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 for food and these
new stores will showcase some of the best that Sainsbury's supermarkets have
to offer to even more communities around the country."

Enquiries

   Investor Relations       Media
   James Collins            Rebecca Reilly
   +44 (0) 7801 813 074     +44 (0) 20 7695 7295

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

 

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