News

Sainsbury’s to sublet HQ as axe falls on more jobs

News

Julia Cahill

23 October 2004

£550m hit to profits this year compels supermarket chain to rationalise

Sainsbury’s will sublet over 50,000 sq ft at 33 Holborn, EC1, after announcing on Tuesday that it will cut a further 750 jobs at its headquarters by next March.

The cuts are part of a wide-ranging revamp for the ailing retailer unveiled by chief executive Justin King. His review questioned whether Sainsbury’s should stay at the £250m HQ, concluding that it should stay.

But outgoing property director Desmond Taljaard said: “We’re not going to need all 330,000 sq ft at Holborn.”

He added: “We are about six weeks away from knowing how much square footage we need.”

After earlier job cuts, Sainsbury’s has around 3,000 staff at its HQ, including the bulk of its property team. It pays £57 per sq ft, compared with the current market rent of £35-£37.50 per sq ft.

A source close to the company said: “If they did sublet, 750 jobs cuts could lead to at least 50,000 sq ft becoming available. But redundancies usually happen over a number of floors, so they will need a considerable amount to attract a tenant.”

The UK’s third-biggest supermarket said it would take a £550m hit to profits this year – £100m of which is due to the property consequences of King’s review (see box).

King said on Tuesday that Sainsbury’s freehold and long leasehold property portfolio, which had a net book value in excess of £5bn at 27 March 2004, would help to underpin its recovery. The review added: “Opportunities to trade stores at the margins will be explored”.

However, analyst Richard Ratner at Seymour Pierce said: “It can only sell to certain people because the Competition Commission says it wants four big chains. It makes downsizing difficult for Sainsbury’s.”

Convenience stores go

12 leasehold convenience stores of around 2,500 sq ft each will go: seven in London, two in the Midlands and three in Glasgow. It will also dispose of its 9,000 sq ft Bluebird store, Chelsea.

Sainsbury’s property director Desmond Taljaard said his team is in talks with potential buyers for Sainsbury’s freehold site at Greenham Common, Berkshire, where it has scrapped plans to build a 700,000 sq ft shed.

£550m hit to profits this year compels supermarket chain to rationalise Sainsbury’s will sublet over 50,000 sq ft at 33 Holborn, EC1, after announcing on Tuesday that it will cut a further 750 jobs at its headquarters by next March. The cuts are part of a wide-ranging revamp for the ailing retailer unveiled by chief executive Justin King. His review questioned whether Sainsbury’s should stay at the £250m HQ, concluding that it should stay. But outgoing property director Desmond Taljaard said: “We’re not going to need all 330,000 sq ft at Holborn.” He added: “We are about six weeks away from knowing how much square footage we need.” After earlier job cuts, Sainsbury’s has around 3,000 staff at its HQ, including the bulk of its property team. It pays £57 per sq ft, compared with the current market rent of £35-£37.50 per sq ft. A source close to the company said: “If they did sublet, 750 jobs cuts could lead to at least 50,000 sq ft becoming available. But redundancies usually happen over a number of floors, so they will need a considerable amount to attract a tenant.” The UK’s third-biggest supermarket said it would take a £550m hit to profits this year – £100m of which is due to the property consequences of King’s review (see box). King said on Tuesday that Sainsbury’s freehold and long leasehold property portfolio, which had a net book value in excess of £5bn at 27 March 2004, would help to underpin its recovery. The review added: “Opportunities to trade stores at the margins will be explored”. However, analyst Richard Ratner at Seymour Pierce said: “It can only sell to certain people because the Competition Commission says it wants four big chains. It makes downsizing difficult for Sainsbury’s.” Convenience stores go 12 leasehold convenience stores of around 2,500 sq ft each will go: seven in London, two in the Midlands and three in Glasgow. It will also dispose of its 9,000 sq ft Bluebird store, Chelsea. Sainsbury’s property director Desmond Taljaard said his team is in talks with potential buyers for Sainsbury’s freehold site at Greenham Common, Berkshire, where it has scrapped plans to build a 700,000 sq ft shed.