Sainsbury's has announced it will close up to 70 Argos stores as it opens more of the brand's concessions in its own supermarkets.
Around 80 Argos offshoots are set to open inside Sainsbury's stores, the company said in a trading update.
The move comes as the UK's second largest supermarket chain warned investors that profits will drop by £50 million for the six month period until 21 September.
Sainsbury's has blamed bad weather and higher marketing costs for the forecasted dip in profits from the same period last year.
The firm also announced it will open 110 new convenience stores and close 30-40, it said.
"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," said Chief Executive Mike Coupe.
"At the same time, we are investing significantly in our supermarkets."
Fewer items on promotion and fewer new video game and toy releases hurt sales at Argos, he said, while Sainsbury's Tu brand of clothing performed well.
Sainsbury's reported sales for the three months to 21 September for stores open at least a year and excluding fuel dropped 0.2%. Clothing and food sales rose, while household goods sales dropped 2%.
A fall in its pension deficit means Sainsbury's can reduce its contributions by £50m a year.
The supermarket also plans to stop new mortgage sales in order to make its financial services devision more profitable since lenders have been earning less from low interest rates on mortages.
It comes after larger rival Tesco sold its entire mortgage portfolio to Lloyds earlier this month, exiting a very competitive market.
