Sainsbury’s to close Argos units amid profit fall
Supermarket heavyweight Sainsbury’s is set to close around 60 Argos stores in favour of adding around 80 smaller Argos sections to its supermarkets.
The news comes after the retailer issued a profit warning to investors for the six months to September 21.
Excluding its fuel businesses and taking into account Sainsbury’s supermarkets that have been open for a minimum of 12 months, its sales for the three months to September 21 were down by 0.2 per cent.
Household goods sales were down by two per cent, while clothing and food sales were up after the retailer’s new Tu clothing brand proved popular with consumers.
Announcing the news on the markets, the UK’s second largest supermarket chain has opted to make the Argos closures after warning investors that its profits will fall by an estimated £50 million over the six month period to September 21.
Poor weather and higher marketing costs are the factors earmarked for blame, while fewer items on promotion and a lack of new video game and toy releases impacted the Argos business.
In its plans, Sainsbury’s will close around 40 of its convenience stores and open another 110, while it is able to save around £50 million a year from reduced pensions contributions after its pension deficit came down.
Sainsbury’s chief executive Mike Coupe said: ”We have focused on reducing prices on every day food and grocery products and expanding our range of value brands, which have been very popular with customers.
"At the same time, we are investing significantly in our supermarkets.”
Sainsbury’s is also set to stop selling new mortgages to usher its financial services arm further into the black, after low interest rates rendered it less profitable.
Rival retailer Tesco has gone somewhat further on that front, having offloaded its own financial services division entirely by selling to Lloyds Bank.