Sainsbury's has ended negotiations with Chinese e-commerce group JD.com over the potential sale of Argos, saying the revised terms put forward were no longer acceptable. The collapse of talks closes the door, for now, on one of the year's most closely watched retail deals and leaves Sainsbury's to continue reshaping Argos within its own business.
The decision comes at a time when Argos's value has fallen dramatically since its £1.1–£1.4 billion acquisition in 2016, reflecting both company-specific challenges and wider pressures in the UK's non-food retail sector. Sainsbury's board said it would only consider offers that safeguard the interests of shareholders, staff and stakeholders, while stressing that Argos remains integral to its long-term plans.
Talks Collapse
Speculation about a possible transaction emerged earlier this month. Sainsbury's confirmed that JD.com had indicated it would only be prepared to engage on a 'materially revised set of terms and commitments'. The supermarket group judged these to be 'not in the best interests' of its shareholders, colleagues or wider stakeholders, and formally terminated discussions.
Although the details of the changes were not disclosed, reports in the Financial Times suggested JD.com may have sought a lower price or amended risk-sharing arrangements in a way that Sainsbury's deemed unacceptable. Investors appeared to support Sainsbury's stance, with shares rising by more than 5 per cent after the announcement.
Argos's Role Within Sainsbury's
Despite walking away from the talks, Sainsbury's emphasised its continued commitment to Argos. The retailer pointed out that Argos is the UK's second-largest general merchandise chain and the third most visited retail website. More than 1,100 collection points now operate across the country, many located inside Sainsbury's supermarkets, according to Reuters.
The company also highlighted recent performance. Argos traded in line with expectations over the summer, with first-half sales and profitability stronger than the year before, when results were lifted by clearance activity. Executives described the 'More Argos, more often' strategy as making good progress, with efforts focused on expanding the product range, enhancing digital services and improving efficiency.
From Billion-Pound Deal to Declining Value
When Sainsbury's acquired Home Retail Group, then the owner of Argos, in 2016, the price was between £1.1 billion and £1.4 billion. The goal was to integrate Argos into its supermarkets, creating savings in logistics and strengthening digital capacity.
However, subsequent years have seen a sharp drop in Argos's value. Sainsbury's most recent accounts put Argos's worth at around £344 million, according to The Guardian. Analysts attribute the decline to the closure of many standalone outlets, the cost of digital investment, and intense competition from online rivals such as Amazon. Changing consumer habits and persistently thin retail margins have compounded the difficulties.
Future for Sainsbury's
Sainsbury's said it remains focused on its 'Next Level' strategy and expects to deliver around £1 billion in underlying retail operating profit and more than £500 million in free cash flow in the 2025/26 financial year. Management underlined that Argos continues to have momentum and will play an important role in delivering these targets.
Although JD.com is no longer in the frame, analysts believe other potential bidders may emerge. For now, Sainsbury's is prioritising operational improvements and deeper integration of Argos into its core business. The rejection of JD.com's revised terms signals the company's determination not to accept a sale that undervalues the brand, even as the challenge of restoring Argos's long-term value remains unresolved.
