Sainsbury’s to axe 70 Argos stores in £500million of cuts

SAINSBURY’S is planning to close up to 70 Argos stores as part of a £500million cost-cutting drive.

The superstore said it also expects to close 15 large supermarkets and as many as 40 convenience outlets.

However, it says it will move 80 Argos branches into its supermarkets and open a further 10 supermarkets and 110 Sainsbury’s Local stores.

Sainsbury’s could not confirm which stores would close or where the new branches would be located. The five-year plan, being led by chief executive Mike Coupe, is set to cut costs by around £500million over the next five years.

It comes after the failure of its £7.3billion takeover of rival Asda.

Sainsbury’s revealed that falls in its sales had recovered in the second quarter of the year but warned of a £50million hit to half-year profits.

The store also announced that its financial services arm would stop new mortgage lending immediately.

It comes amid reports the group is looking to sell off its mortgage book following Tesco’s recent move to offload its home-lending business.

Andrew Montlake, managing director of the independent mortgage broker Coreco said: “The level of competition is causing a major rethink among lenders for whom mortgages are a bolt-on rather than their core business.

“Just as with Tesco, for Sainsbury’s the margins are no longer there and its mortgage division was almost certainly struggling to wash its own face. Lower home purchase levels are rubbing salt in the wound of the exceptionally environment.

“Lenders are experiencing a double whammy of low rates, hammering margins, and relatively low transaction levels, hitting volumes. For peripheral mortgage players it’s a bridge too far, all the more so with the potential impact of Brexit yet to be felt.”

On the second-quarter trading performance, Mr Coupe said: “We have focused on reducing prices on everyday food and grocery products and expanding value brands.” low-rate