Sainsbury’s shuts Netto budget chain

SAINSBURY’S has abandoned plans to take on Aldi and Lidl with its own discount chain.

Britain’s third largest grocer will shut the 16 Netto stores it launched over the past two years and 400 jobs are at risk. The supermarket will end its Netto joint venture with Denmark’s Dansk Supermarked next month after finding itself spread too thin following the recent £1.4bn takeover of Argos owner Home Retail Group.

Chief executive Mike Coupe said: ‘To be successful over the longterm, Netto would need to grow at pace and scale, requiring significant investment and the rapid expansion of the store estate in a challenging property market.

‘Consequently we have made the difficult decision not to pursue the opportunity further.’

The Big Four grocers have been losing market share to Aldi and Lidl, and the Netto joint venture was an aggressive move by Coupe to break the strangle hold.

The launch back in 2014 had been his first major announcement since taking over from Justin King as chief executive.

While Sainsbury’s said the Netto stores were performing well it wants to focus its attention and cash on making Argos work. It has also struggled to find enough suitable sites for expansion.

Shares fell 2.2pc, or 5.2p to 230.9p.