Sainsbury's sells Argos for GBP120 million, focus narrows to groceries

J Sainsbury PLC on Friday said it had agreed to sell its Argos business for £120 million, significantly less than it had paid for the company, in order "to fully focus on its core food business".

The London-based grocer is divesting the brand, which includes its homeware offering, to Swift Partners, registered as Swift Whistle Midco Ltd.

The anticipated sale price comes in well below the £1.2 billion Sainsbury's had paid for Argos back in 2016.

Swift is a newly-established acquisition vehicle controlled by Richard Pennycook, Trevor Strain and Matt Truman, backed by True Capital.

Sainsbury's noted that Pennycook and Strain have had "35 years' combined experience in senior retail roles including at Tesco, The Co-op, Morrisons, Howdens and the RAC" while Truman is the executive chair of retail specialist investment and advisory firm True Capital.

Cash proceeds from the sale are expected to be at least £120 million, including upfront and deferred payments from the distribution centre divestment. Final proceeds are subject to adjustment, and expected to be offset by separation costs.

"Long-term commercial agreements with Argos, including rental income for Argos stores inside Sainsbury's and income relating to Nectar360 and Nectar, will create additional ongoing value," Sainsbury's noted.

The deal is expected to complete in February 2027, with a full separation expected two years later.

The grocer maintained its target for annual underlying operating profit between £975 million and £1.08 billion, and retail free cash of £500 million in 2027.

It expects the disposal to be neutral in relation to underlying operating profit, and to be accretive to underlying earnings per share by a low single-digit amount. The sale is expected to lead to a non-cash impairment charge of £350 million, but to support improved underlying retail free cash flow.

Sainsbury's anticipates that agreements with Swift and reduced lease interest costs will be greater than any dis-synergies and lost profit from the sale of Argos.

Chief Executive Simon Roberts commented: "As we have strengthened our core food business, we have carefully considered what it will take to create the strongest possible future for Argos."

Roberts continued: "For Sainsbury's, this is a further step forward in our strategy. Having rebuilt the core strengths of our food business, this agreement allows us to focus all our resources and investment on the significant opportunities ahead."

Going forward, Argos will continue trading through standalone stores and stores inside Sainsbury's, with Swift owning these Argos sites. It will continue sales via online delivery and collection points. Swift will also acquire Argos's sales channels, brands, logistics networks, Argos Care and Argos Pet Insurance, plus a Sainsbury's distribution centre in Daventry and sourcing offices in Shanghai and Hong Kong.

Sainsbury's shares rose 3.6% to 368.40 pence on Friday morning in London.

Copyright 2026 Alliance News Ltd. All Rights Reserved.