SUPERMARKET group Sainsbury's is considering selling its Homebase home improvement business, it has revealed.

The retailer said yesterday it was in the early stages of looking at a number of "strategic alternatives" for Homebase, which included an alliance, disposal of the business, or a joint venture deal.

Sainsbury's added that it had been in discussions with a number of parties regarding Homebase.

It has been estimated that the business could fetch more than £1bn.

The announcement comes three months after chief executive Sir Peter Davis said that Sainsbury's was focused on improving profitability in the supermarket business and would be considering alternatives for Homebase.

Potential buyers for Homebase have been tipped to include US group Home Depot and European company LeRoy Merlin.

Homebase, which opened its first store in 1981, and has a branch on Hylton Road and one on Bath Road in Worcester, is one of Sainsbury's strongest performing businesses and has around 12 per cent of the UK home improvement market.

It ranks behind Kingfisher's B&Q in terms of market share - B&Q has more than 20 per cent.

Today's announcement comes a month after Sainsbury's posted an upbeat trading statement showing overall sales, including sales at its supermarkets and Homebase stores, up 9.2 per cent for the three months to the end of June.

Those figures came two months after the retail giant reported profits had slumped 23 per cent in the last year because of poor performance at its supermarkets.

Since then, Sainsbury's has launched what it calls a "major quality campaign" in-store, improving displays and using Naked Chef Jamie Oliver in its advertising campaign.

"We are not being driven by financial need but strategic need," said Sainsbury's chief executive Peter Davis.

"We want Homebase to be a successful DIY player in Europe and we are not sure whether our pockets are deep enough to fund that as well as our main supermarkets business."

Mr Davis said potential buyers or partners had been told about the plans with preliminary indications set for late September and a possible announcement well into October.