Sainsbury’s, which also owns Argos and Habitat, plans to invest c. €152m in buying 10 stores from Homebase and converting them into big supermarkets in the retailer’s biggest expansion in more than a decade.
Simon Roberts, the chief executive of the Sainsbury’s group said: “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.”
Five years after Sainsbury's closed 15 large supermarkets and several Argos stores due to competition from Aldi and Lidl, the company, along with Tesco, has regained market share by matching Aldi's prices and offering discounts through loyalty cards. Sainsbury's wide range of products is well-positioned to benefit from customers choosing more expensive foods and opting to save money by indulging at home.
Homebase, currently owned by Hilco, is finalizing a lending facility of up to around €111.1m with Wells Fargo, set to expire in December. The DIY chain has seen a troubled history since it was established by Sainsbury’s in 1979 and then sold off in 2006. After the sale of 10 stores, it will reduce to just over 130 outlets, almost half the 250 it had when Hilco acquired it for c. €1.9m from the Australian retail group Wesfarmers in 2018.
Wesfarmers owned the group for just two years, in what some consider to be one of the most disastrous retail takeovers. Homebase’s parent group, HHGL, incurred a loss of c. €99.5m in the year to January 2023, following an 11% drop in sales. The DIY industry saw a surge during the COVID-19 pandemic but is now experiencing slow sales due to higher costs and increased mortgage or loan payments because of higher interest rates.
Image source - Pexels.
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