Sainsbury's agrees £120m deal to sell Argos

Sainsbury's has revealed it is selling Argos under a "business as usual" deal that will allow the company to concentrate on its core grocery business.

Sainsbury's said it expected cash proceeds of at least £120m from the agreement with Swift Partners, whose shareholders include Richard Pennycook - a former chief executive of the Co-op Group.

It had paid £1.4bn for the chain back in 2016.

Sainsbury's emphasised that the transfer of ownership would not result in any visible changes, such as job losses or the loss of customer loyalty benefits.

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Sainsbury's said that Argos would continue to trade through its existing channels, "with long-term commercial agreements covering Argos stores in Sainsbury's, Nectar, Nectar360 and Habitat ensuring continuity for customers, colleagues and suppliers".

Simon Roberts, Sainsbury's chief executive, said of the decision: "Sainsbury's has transformed Argos into a leading multichannel retailer with millions of customers and thousands of talented colleagues.

"As we have strengthened our core food business, we have carefully considered what it will take to create the strongest possible future for Argos.

"Swift brings retail leadership, operational expertise, technology capability and long-term investment, alongside a deep commitment and belief in the future potential for Argos customers and colleagues... (they) understand and value the Argos brand, share our values and will accelerate Argos's transformation through their dedicated expertise and long-term investment.

"I would like to thank Argos colleagues for all of their commitment and hard work. Today is an important next step in building the strongest future for Argos and I would like to reassure our colleagues, customers and suppliers that it's business as usual."

Sainsbury's shares were trading 4% up in early dealing, suggesting that investors broadly welcomed the sale.

When it bought the brand in 2016, Sainsbury's embarked on a strategy to bring the general merchandise retailer - then famed for its paper catalogue - within its stores to cut costs and more easily enable customer collections.

But its offerings have found competition increasingly stiff, especially from the likes of Amazon, and growth has proved increasingly eleusive.

Swift said it would build on the strength of the Argos brand, its multichannel model and store network, bringing "expertise and investment to accelerate growth and innovation in a fast -moving and competitive general merchandise market."

Mr Pennycook said: "Argos's combination - of a strong digital business supported by standalone stores, stores inside Sainsbury's and Local Fulfilment Centres - gives it a distinctive position in the market and an excellent platform for growth. We hold Argos senior management in high regard and plan to build on its strengths."

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