Sainsbury’s to sell Argos in £120m deal

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Sainsbury’s has agreed to sell its Argos business to Swift Partners in a deal worth at least £120 million.

The UK’s second-largest supermarket chain said the firm will buy Argos standalone stores, as well as its stores within Sainsbury’s shops, on a long-term agreement, including its logistics network, pet insurance and product warranty cover.

Swift will also buy Sainsbury’s distribution centre in Daventry and Sainsbury’s sourcing offices located in Shanghai and Hong Kong as part of the deal.

Swift is a new firm set up by retail experts including former Co-operative Group boss Richard Pennycook, former Morrisons chief operating officer Trevor Strain, and backed by Matt Truman and his retail investment and advisory firm, True Capital.

Sainsbury’s will get cash proceeds of at least £120 million from the sale, with a £70 million up-front payment when the deal completes, which is expected in February next year.

Supermarket Sainsbury’s has agreed to sell its Argos business to Swift Partners (PA)

Last month, the retailer said recent trading has been “encouraging” despite continued uncertainty over the impact of the Middle East conflict on its shoppers.

The chain was buoyed by stronger growth in its core grocery business, while general merchandise – which includes clothing brand Tu – and its Argos business both reported declines.

It revealed that total retail sales, excluding fuel, grew by 2.7 per cent to £9.15 billion in the 16 weeks to June 20, compared with the same period a year earlier.

Sales of the Sainsbury’s brand grew 3.1 per cent to £8.04 billion over the quarter, with grocery sales up 3.6 per cent year on year.

Bosses suggested the firm had recorded growth supported by investment into value, such as through its Aldi price match and Nectar price discounts.

Nevertheless, grocery growth was partly offset by a 3.7 per cent sales fall in its general merchandise and clothing business.

The group said sales at its Argos business dipped 0.5 per cent as positive volume growth was “offset by the impact of subdued consumer spending on average selling price”.

Chief executive Simon Roberts said: “Customers are looking for value now more than ever. We are consistently delivering outstanding quality at great value, so more people are choosing Sainsbury’s for their big weekly shop.

“This has driven an encouraging start to the year with continued volume growth and market outperformance.

“With the World Cup in full swing and an exciting summer of sport ahead, I want to say a huge thank you to all our Sainsbury’s and Argos colleagues and our farmers and suppliers for showing up so well for our customers every day.”

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