Almost four-fifths of standalone Argos stores will close by 2024, with the potential loss of more than 3,500 jobs, as owner J Sainsbury refocuses on food under new chief executive Simon Roberts.
Argos, which Sainsbury’s acquired in 2016, currently has 583 stores and hundreds more collection points within supermarkets. Sainsbury’s said that 120 stores that did not reopen after the UK’s first Covid-19 lockdown would now close permanently and the overall estate would be cut to about 100 stores.
At the same time, up to 200 more Argos collection points will be added to supermarkets and convenience stores and the company said the lost jobs would be more than cancelled out by roles created elsewhere.
Mr Roberts said that Argos and other non-food businesses, including Sainsbury’s Bank, “must deliver for their customers and our shareholders in their own right”.
He added that Sainsbury’s expects returns and profits from its banking unit to double over the next five years — despite sounding out potential buyers for the business — and said that during the next three years it would “make Argos a simpler, more efficient and more profitable business”.
The company also plans to close its meat, fish and delicatessen counters in supermarkets, citing lower customer demand and a need to reduce food waste. It said it would use £600m saved from this and other cost reductions to invest in new products and lower prices on everyday essentials.
The company said it would book a £438m one-off charge to reflect the cost of Argos store closures and other strategic changes, pushing the company into a first-half pre-tax loss of £137m.
Underlying profits were £301m, above analysts’ expectations of about £281m as compiled by Capital IQ and up from £238m last year.
Sales growth was strong, with grocery sales rising 8.2 per cent. The half-year included most of the first UK-wide lockdown measures, starting in March, and therefore benefited from the transfer of spending from eating out to dining at home.
The company also declared a special dividend of 7.3p, having deferred a decision on a final dividend at the end of the 2019-20 financial year, and an interim dividend of 3.2p