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Sainsbury’s is to close up to 70 Argos stores and replace them with outlets inside its supermarkets.
The closures are part of a reorganisation of the retailer’s store portfolio which will also see the closure of up to 15 supermarkets and 40 convenience stores.
However, 10 new supermarkets will also be opened and more than 100 new convenience stores are planned. Eighty new Argos outlets will be opened inside supermarkets.
The reorganisation is likely to cost hundreds of jobs and was announced as the grocer revealed a further fall in sales.
The supermarket group said it was aiming to reduce costs by £500m over five years and cut debts by £750m as a result of rejigging its store estate.
It also plans to stop selling mortgages through its banking operation.
Homeloan sales will stop immediately as Sainsbury’s said it wanted to halt capital injections into its bank by next year. The company, which began offering mortgages in 2017, has pumped hundreds of millions of pounds into the bank since taking full ownership in 2014.
Sainsbury’s exit from mortgages comes after Tesco and Which pulled out of the market in May amid a price war in the mortgage sector which has been hit by a slowdown in the housing market.
Sainsbury’s said sales at established stores fell 0.2%, excluding fuel, in the last three months, an improvement on a 1.6% fall in the previous quarter.
It said pretax profits in the first half of its financial year would be £50m lower partly because of unseasonable weather and higher marketing costs. The group nevertheless expects to deliver full year profits in line with expectations.
Mike Coupe, the chief executive of Sainsbury’s, said: “Sales momentum was stronger in all areas and we further improved our performance relative to our competitors, particularly in grocery. 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, driving consistent improvements to service and availability.
“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.”
He said clothing sales had been boosted by clearance sales and strong online growth and its Tu clothing brand continued to take market share.
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