Supermarket group Sainsbury’s has agreed the sale of Argos to Swift Partners for £120million, a decade after it bought the retailer.
Sainsbury’s will receive cash proceeds of at least £120million from the sale, with a £70million up-front payment when the deal completes next year.
The supermarket giant said it had sold Argos to Swift Partners, a group of retail specialists which includes former Co-Operative Group boss Richard Pennycook.
Sainsbury’s boss Simon Roberts said the group had ‘carefully considered’ options for Argos’s future and the deal would allow it to ‘fully focus on its core food business’.
The grocery chain said Swift Partners will buy Argos’s standalone stores, as well as its stores within Sainsbury’s shops, on a long-term agreement. This will include its logistics network, pet insurance and product warranty cover.
In addition, Swift will acquire Sainsbury’s distribution centre located in Daventry and Sainsbury’s sourcing offices located in Shanghai and Hong Kong.
Swift is a new firm set up by retail veterans including Pennycook, former Morrisons chief operating officer Trevor Strain and backed by Matt Truman and his firm True Capital.
The new deal is expected to be completed by February 2027, with the businesses fully separating by February 2029.
Asked about job cuts, Pennycook said it was ‘business as usual’ with ‘no big lurch’ as Swift Partners eyes further growth at Argos. The retailer will also maintain its relationships with Habitat and the Nectar loyalty scheme.
Sainsbury’s bought Argos and other retail brands including Habitat after striking a £1.4billion deal with Home Retail Group.
Earlier this year, analysts said Argos was becoming a thorn in Sainsbury’s side after poor Christmas sales
Argos has previously been described as a ‘thorn in Sainsbury’s side’, having quietly struggled for several years in the face of cheaper online competitors.
Sainsbury’s shift to a food-first strategy has seen Argos’s high street footprint minimised, as stores closed or placed into existing supermarkets as a concession.
The sale to Sainsbury’s comes after an attempt to sell the retailer to Chinese ecommerce giant JD.com.
Analysts came to view Argos as an unnecessary distraction for Sainsbury’s as it competes with Tesco, Aldi and Lidl.
Clive Black, retail analyst at Shore Capital, said: ‘In tough market conditions in recent years, Argos has been a variable and at a Group level sub-optimal performer from a financial perspective, and so a business that has drawn considerable inspection from the equity market, often on the downside.’
Argos is the UK’s second-largest general merchandise retailer, with the third most-visited retail website in the country.
For decades, the retailer championed a model where customers would browse from the catalogue of toys, jewellery and other products rather than the shelves.
The retailer scrapped the ‘book of dreams’ in 2020, as it went full throttle for online custom.
Pennycook did not rule out bringing back the Argos catalogue but refused to ‘reveal plans to my competitors.’
He said: ‘We do see the heritage of Argos is a very important part of its brand. I used to sit around the table putting… stamps into books. We want to build on that strong heritage. At same time, we all know the brand has to be relevant for today and customers needs today.’
However, it has battled higher costs and weaker consumer confidence, as well as stiff competition from cheap online rivals such as Shein and Temu.
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