Sainsbury’s briefly explored selling Argos in September before cutting 2,200 jobs following significant losses. Analyst says retailer is treated like an ‘unloved child’
A major UK high street retailer is in serious trouble, with its parent company slammed by experts. Argos “is not performing to the best of its ability” and has been treated like an “unloved child” due to the strategy of its owner Sainsbury’s, says an analyst.
The future of Argos was thrust into the spotlight after Sainsbury’s confirmed in September that it was in talks to sell the retailer to Chinese e-commerce titan JD.com. However, a day later, Sainsbury’s ended the discussions with JD.com.
Since then, the retailer has reported massive losses as it slashed thousands of jobs amidst declining sales. According to Dan Coatsworth, head of markets at AJ Bell, Sainsbury’s decision to shut many Argos stores in recent years and a plan that “stuck the brand as a concession inside supermarkets” has resulted in the retailer being less visible, as reported by City AM.
He further commented that while “that might save a lot of money on rent and maintenance it also risks Argos no longer being front of mind for someone looking to buy general merchandise”. Coatsworth also stated that Sainsbury’s “declaring a food-first strategy hasn’t helped Argos”.
The analyst likened the situation to “it’s like a parent publicly declaring one of their offspring to be the favourite, and the other children left unloved”. Sainsbury’s did not respond to City AM when contacted for comment.
Recently filed accounts with Companies House revealed that Argos suffered a pre-tax loss of £223.2m for the 12 months to March 1, 2025. The deficit emerged following the retailer recording a pre-tax profit of £37.3m in the preceding financial year.
The figures also revealed that turnover dropped from £4.22bn to £4.13bn during the same timeframe. Argos also cut its workforce throughout the year from 12,000 to 9,800 staff members.
In the findings, the firm stated its reduced turnover was “driven by a subdued and highly competitive general merchandise market”.
The company noted there had been a “significant reduction” in web traffic during the opening half of its financial year and that a “cooler and wetter summer” left its sales trailing behind projections.
Nevertheless, Argos reported that whilst “remaining highly promotionally driven its sales improved during the final six months “as the online traffic improved”. The retailer also confirmed that it achieved year-on-year growth once again in its fourth quarter
Dr Gordon Fletcher, associate dean for research and innovation at the University of Salford, said Argos’ latest figures “presents a challenging question for Sainsbury’s” over whether to sell the retailer or hold on to it for now. He went on to say that the “bricks-and-clicks business model for Argos still brings additional costs that are not found with the more dynamic virtual-only retailers”.
Dr Fletcher also noted that whilst “it’s clear that the sell option is under consideration by management”, “the hold option for Sainsbury’s may be a harder decision”.”
He said: ” It’s like a parent publicly declaring one of their offspring to be the favourite, and the other children left unloved. The evolution from the old catalogue model has been a rocky one for all the former UK high street staples.
“Littlewoods went to the pure online model. Others have gone the same way or just disappeared. The alternative route would be to move to a full face-to-face experience and then headlong into an entirely different set of competitors.
“Either way, the hybrid model for general merchandise appears to be an increasingly difficult one to sustain.”
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