Sainsbury's chief executive Mike Coupe set out a plan to radically shake up his stores on Wednesday, a bid to keep his job in the wake of the collapse of the merger with Asda.
That deal was blocked by competition watchdogs, leaving the City asking what Coupe would do next. The shares have tumbled on fears Sainsbury is losing ground to a revitalised Tesco and the German discount players Aldi and Lidl.
Today Coupe said he would close more than 100 stores — 15 big supermarkets, 40 convenience stores and 70 Argos branches. In turn, he will also open 110 new convenience stores and put 80 Argos branches inside Sainsbury’s stores. There will be 10 new major supermarkets.
Sainsbury bought the catalogue retailer in 2016, a surprise move by Coupe. There are already 290 Argos branches inside the grocer.
While staff will be moved, Sainsbury said it doesn’t expect to make job cuts. Bringing the two businesses closer together should cut costs by £500 million over five years. That will help it to cut debts by £750 million over three years.
Sainsbury shares rose 2.5% to 219p as the City digested the news. They were 322p a year ago.
The grocer warned profit for the half-year will drop £50 million due to bad weather and higher marketing spending. It also confirmed reports it is pulling out of the mortgage market, a brutally competitive field. Tesco recently sold its mortgage portfolio to Lloyds Bank for the same reasons.
In the second quarter, like for like sales fell 0.2%. General merchandise was down 2%, clothing was up 3.3%.
Coupe said Sainsbury’s has “further improved our performance relative to our competitors”.
He added: “We have focused on reducing prices on every day food and grocery products and expanding our range of value brands, which have been very popular with customers.”
