Home Retail’s finance business would be an attractive addition to Sainsbury’s bank.
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It already has a major presence in the home improvement sector, through Bunnings, the biggest DIY chain in Australia and New Zealand with more than 300 stores. It says it has nearly completed the programme.
Online grocery sales grew by 10%, with total orders up 15%. The stores it has shuttered were unprofitable.
But Mr Coupe said he “couldn’t be drawn” on plans for Homebase, stoking speculation it would seek to offload the business. According to Home Retail, this would be likely to result in a £200m cash return to the group’s shareholders.
In today’s trading update Home Retail Group set out its achievements so far in the Argos transformation plan, which is aimed at “reinventing Argos as a digital retail leader”. Wesfarmers has completed its due diligence and the two companies are now finalising the transaction documentation, Home Retail said. “However, discussions are ongoing and there can be no certainty that a transaction will be agreed”. If the takeover went ahead, Sainsbury’s would look at which leases to renew and which to let go.
It is widely expected that Homebase will be sold-off to private equity or another retailer as a side-deal to Sainsbury’s takeover, as it was not mentioned once by the supermarket in the presentation.
Sainsbury’s has a superstore at Meole Brace Retail Park in Shrewsbury, which is also home to the town’s Argos outlet, while Sainsbury’s has a branch at Telford Forge Retail Park, near to Telford Bridge Retail Park which is home to an Argos store. Argos is an IRUKTop500 Elite retailer, while Homebase is a Leading retailer.
“Furthermore, during December, Argos experienced a 13% reduction in traditional store walk-in sales, exacerbated in high-street and shopping centre stores”.
Coupe dismissed concerns expressed by some analysts and investors that there was little overlap between Sainsbury’s and Argos customers.
Sainsbury’s non-food lines, including its Tu clothing range, would be sold in Argos stores while a handful of Argos branches would also sell food. “Home Retail’s future as an independent retailer could be coming to an end”.
Retail analysts have been responding to Sainsbury’s Christmas trading update, with the retailer reporting a strong outlook despite a modest fall in festive sales. 40 on the Australian Securities Exchange.
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Once it completes the Homebase sale, chief executive John Walden said roughly £200m would be returned to shareholders, with £75m for restructuring, separation and deal costs, £50m for its pension scheme and £15m retained.
