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Sainsbury's To Close 420 Argos Stores

Argos store shutterstock 76731189986621 725 x 500.jpg

Sainsburys has published interim Results for the 28 weeks ended 19 September 2020.

  • Total Retail sales up 7.1 per cent (excluding fuel) with like-for-like sales up 6.9 per cent. Grocery sales up 8.2 per cent and General Merchandise sales up 7.4 per cent
  • Digital sales up 117 per cent to £5.8 billion, nearly 40 per cent of total sales. Groceries Online sales up 102 per cent
  • Statutory Group sales (excluding VAT) down 1.1 per cent, with fuel sales down 44.6 per cent
  • Loss before tax £(137) million, reflecting £438 million of one-off costs associated with Argos store closures and other strategic and market changes
  • Underlying profit before tax £301 million
  • Retail costs of approximately £290 million to protect customers and colleagues from COVID-19, partially offset by £230 million business rates relief
  • Free cash flow £943 million 
  • Non-lease net debt down by £912 million to £267 million
  • Special dividend of 7.3p to be paid in lieu of final dividend for the 2019/20 financial year, aligned to policy of 1.9x full year dividend cover by underlying earnings 
  • Interim dividend of 3.2p, in line with policy of paying 30 per cent of prior full year dividend
  • Full year underlying profit before tax now expected to be at least five per cent higher than last year, reflecting stronger than expected sales, particularly at

Strategy Update: Driven by our passion for food, together we serve and help every customer

We are refocusing on our core food business, putting food back at the heart of Sainsbury’s. We will:

  • Lower food prices, focusing on offering customers consistently good value
  • Accelerate food innovation, tripling the number of new products we launch each year
  • Profitably grow Groceries Online sales to meet further demand
  • Increase the rate of new Convenience store and Neighbourhood Hub openings over the next three years
  • Continue to reduce plastic and food waste and inspire customers to eat healthier products, which will be better for the climate and environment, as we work towards becoming Net Zero by 2040
  • Close our meat, fish and deli counters, based on reduced customer demand. This will make stores simpler to run and reduce food waste. We will keep adding more quality and innovation in our aisles

Our other businesses and brands must deliver in their own right and actively support our ambition in food

  • We are building on the success of integrating Argos stores into Sainsbury’s and accelerating the final stages: 
    • By March 2024 we will open up to 150 more Argos stores in Sainsbury’s and add 150-200 more Argos collection points in supermarkets and convenience stores, so that every Sainsbury’s supermarket will have either an Argos store in store or a collection point
    • As we add more Argos stores and collection points in Sainsbury’s, we will close around 420 Argos standalone stores, reducing the UK Argos standalone store estate to around 100 by March 2024
  • We are expanding our ambition for Habitat, which will become our main home and furniture brand in Argos and Sainsbury’s
  • We are accelerating our plans for Nectar, bringing greater support for food and faster profit growth
  • We expect Financial Services returns and profits to double in five years, despite the challenges of COVID-19

Simon Roberts, Chief Executive of J Sainsbury plc said: “As we go into lockdown in England for the second time this year and restrictions are in place across the UK, we know our customers and colleagues are feeling anxious and we will do all we can to support them. Our colleagues have done an exceptional job going above and beyond for our customers every day which is why we are giving our frontline colleagues a second 10 per cent thank you payment. Above all else today, I want to express my heartfelt thanks to every one of my colleagues in our stores, in our depots, and across our store support centres for all your hard work and for your outstanding team effort. We also want to support our communities and those in need and are creating a £5 million community fund for local charities and good causes, in addition to the £7 million we donated to Fareshare and Comic Relief earlier this year. We want to do our bit to ensure that no one goes hungry at Christmas and to support those most in need.

“COVID-19 has accelerated a number of shifts in our industry. Investments over recent years in digital and technology have laid the foundations for us to flex and adapt quickly as customers needed to shop differently. Around 19 per cent of our sales were digital this time last year and nearly 40 per cent of our sales are digital today.

“While we are working hard to help feed the nation through the pandemic, we have also spent time thinking about how we deliver for our customers and our shareholders over the longer term.

“We will put food back at the heart of Sainsbury’s. We are already working to make this happen – we have lowered prices on over 1,500 every day grocery products over the past few months and we will do more of this, focusing on the staple products that our customers buy every day. We know that customers are feeling the pinch and we want them to feel confident they will get always get great value, quality and service from Sainsbury’s. We will focus on accelerating product innovation and will bring new and exclusive products to our customers much more often. To support our ambition in food, we are accelerating our ambition to structurally reduce our cost base right across the business so we can invest faster back into our core food offer.

“Our other brands - Argos, Habitat, Tu, Nectar and Sainsbury’s Bank - must deliver for their customers and for our shareholders in their own right. Argos sales have been strong over the past six months and we have gained almost two million new customers as people have re-connected with Argos. Over the next three years we will make Argos a simpler, more efficient and more profitable business while still offering customers great convenience and value and improving availability. We will also make Habitat more widely available in Sainsbury’s and Argos, giving customers access to stylish home and furniture products at more affordable prices.  We are talking to colleagues today about where the changes we are announcing in Argos standalone stores and food counters impact their roles. We will work really hard to find alternative roles for as many of these colleagues as possible and expect to be able to offer alternative roles for the majority of impacted colleagues.

“Given the unprecedented circumstances of this year and the challenges facing our colleagues, including the changes we are announcing today, I have informed the Board that if a bonus is payable, I will waive any bonus entitlement for this financial year.

“We are raising our ambitions. By delivering improvements in value and quality and simplifying this business, we will do a better job for our customers and deliver an improved financial performance and stronger shareholder returns.

 “Right here and now I and all the team are focused on supporting and delivering for our customers in the days and weeks ahead.” 

Source : Sainsbury's

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05 November 2020

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