Sainsbury may move back to Stamford Street base

J Sainsbury is considering moving back to its former headquarters site in the Southwark district of London, which was its home for nearly 100 years.

Sir Peter Davis, Sainsbury's chief executive, yesterday confirmed that a return to its Stamford Street base was "a possibility" depending on the rents being demanded when its old headquarters building is redeveloped.

It was only last month that Sainsbury's moved 2,600 head-office staff from nine old-fashioned buildings into prestigious new premises on Holborn Circus. The glittering offices were originally developed for Andersen Consulting on the site of the old Mirror Group newspaper headquarters. The modern open lay-out was intended to signal a "culture change" at the group as it attempts a fightback against its arch-rival, Tesco.

However, the premises carry a hefty rental bill of around £48 per square foot, which makes Sainsbury's head office costs way ahead of its rivals such as Tesco, Safeway and Asda.

Sir Peter said it was "too early to say" whether Sainsbury's really would return to its old haunt. But the Stamford Street buildings will be demolished in January and Sainsbury's has already secured planning permission for one part of the site for a new office development designed by Sir Norman Foster. It is expected to be finished in less than three years.

Sainsbury's was based in the Blackfriars area of London from 1890 and moved to Stamford Street in 1912.

Yesterday Sainsbury's reported a 3.2 per cent increase in underlying profits to £309m in the six months to 13 October. Britain's second biggest supermarket group said trading in the first five weeks of the second half had been "encouraging". This followed a trading update last month which showed like-for-like sales growth of 6 per cent.

"I think we've come a long way in a year," Sir Peter said. Pointing to refurbished stores, cost savings and continuing improvements in the supply chain, he said Sainsbury's had stabilised its market share in the battle with Tesco.

The shares closed 1.25p lower at 385.75p.