A ‘review of the estate’ by supermarket chain Sainsbury’s will see the closure of some 125 stores across its portfolio but there will also be new store openings.
Up to 70 Argos stores, which the firm bought in 2016, will also close but 80 branches will be opened within Sainsbury stores. It is understood Argos staff will be transferred. Details of any possible redundancies have not been released.
In its second quarter trading statement the firm said there will be 10 new supermarkets and 10-15 closures; 80 new Argos in Sainsbury’s and 60-70 Argos closures; .110 new convenience stores and 30-40 closures
The statement adds: “We expect the closures to deliver an ongoing net operating profit benefit of c.£20m per year. We expect the one-off cost of closures and impairments to be £230m to £270m, of which the cash cost will be £30m to £40m.”
The statement says the firm is looking to structurally reduce costs by c.£500m over five years. The move follows the collapse of merger plans with Asda.
Mike Coupe, Chief Executive Officer, 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 categories1, but sales were impacted by reduced promotional activity and the timing of new product releases in gaming and toys. Clothing sales were boosted by clearance activity and strong online growth and Tu continued to grow market share1. Financial Services sales were in line with expectations.”
Sainsbury’s financial services arm will stop new mortgage lending “immediately.”