Sainsbury could axe 200 Argos stores

SAINSBURY’S £1bn attempt to snap up Home Retail Group could see as many as one in four Argos stores wiped from the High Street, writes Rupert Steiner.

If the deal goes ahead, the grocer plans to pull down the shutters on up to 200 Argos shops that are too close to its stores.

Sainsbury’s would replace the stores with Argos counters inside its outlets – a move that could place thousands of jobs at risk.

Home Retail Group, which also owns Homebase, said that it had dismissed the £1bn approach from Sainsbury’s.

But this enraged investors owning almost a quarter of the HRG stock who felt they should have been consulted.

Sainsbury’s is expected to come back with an enhanced deal.

If successful it could see the Argos fascia popping up inside larger Sainsbury’s supermarkets, while customers who go into Argos outlets would be able to buy Sainsbury’s clothing and homewares, but not food.

Sainsbury’s has 597 supermarkets and 707 convenience stores while there are 840 Argos stores.

Sources say a key attraction of the deal is the savings that can be made from shutting a large chunk of Argos stores.

The leases of as many as 40pc come up for renewal in the next four years which make closing them less expensive. One source close to the deal said: ‘This makes the transaction attractive’.

Yesterday Sainsbury’s shares closed 1.1p lower at 241p while Home Retail Group dropped nearly 5pc, or 6.9p, to 132.4p.