The potential closures will include 70 Argos branches.
In its second quarter trading update, despite reporting improved sales momentum, Sainsbury’s has announced plans to close more than 100 stores across its portfolio. The closures will be across its main supermarket and convenience brands, with as many as 70 standalone Argos stores shutting and moving to a nearby Sainsbury’s.
The company plans to bring down costs by £500m over the next five years, and expects the one-off cost of the closures to be between £230m to £270m.
However, new stores will also open as part of continued “estate review and growth plans”, with 10 new supermarkets and 110 new convenience stores slated. Around 80 new Argos branches are planned within Sainsbury’s stores.
“We expect the closures to deliver an ongoing net operating profit benefit of £20m per year,” a spokesperson commented in the update to shareholders.
Job losses are not anticipated as a result of the Argos stores closing, as staff are expected to be redeployed. Details of the Argos branches set to close have not yet been confirmed, but the company said that Argos relocations would be to “nearby” Sainsbury’s stores. Around 700 standalone Argos branches will remain open.
Sainsbury’s reported that value brands had helped boost grocery sales, but clothing and other merchandise sales have dropped.
Sainsbury’s chief executive Mike Coupe commented: “Sales momentum was stronger in all areas and we further improved our performance relative to our competitors, particularly in grocery. Argos continued to grow market share in key categories, but sales were impacted by reduced promotional activity and the timing of new product releases in gaming and toys.”