Sainsbury’s to axe 3,500 jobs as interim sales climb

Sainsbury’s plans to close 420 Argos stores by 2024 alongside shuttering its meat, fish and deli counters due to reduced customer demand, with 3,500 jobs at risk as a result.

The grocer will add a further 150 Argos shop-in-shops to its supermarkets, of which there are currently 315, alongside up to 200 more collection points on top of the current 296. The planned Argos store closures will leave 100 standalone stores in total.

Sainsbury’s said it has an “excellent track record” of finding alternative roles for colleagues, having retained 90% of staff when it acquired Argos in 2016.

Chief executive Simon Roberts has said “given the unprecedented circumstances of this year and the challenges facing our colleagues” he will waive his bonus for this financial year, if one is payable.

Sainsbury’s reported a pre-tax loss of £137m in the 28 weeks to September 19 as a result of “£438m of one-off costs associated with Argos store closures and other strategic and market changes”.

On an underlying basis, pre-tax profit rose 26% to £301m.

The grocer’s retail sales excluding fuel rose 7.1%, up 6.9% on a like-for-like basis, with grocery and general merchandise sales up 8.2% and 7.4% respectively. Digital sales jumped 117% to £5.8bn, accounting for nearly 40% of overall sales.

Sainsbury’s Argos and food counter closures are part of a broader strategic shift helmed by Roberts, which hinges on driving its online and neighbourhood store expansion, lowering prices and driving food innovation by tripling its number of new product launches per year.

Roberts unveiled a shake-up of its grocery team to execute this strategy, which will see long-standing executive Paul Mills-Hicks step down as commercial director after 17 years with the retailer.

Two new roles have been appointed to oversee Mills-Hicks’ remit. Director of fresh food Rhian Bartlett will take on the newly created role of food commercial director, while director of business development Mike Luck will become general merchandise and clothing commercial director. Both will join Sainsbury’s operating board and take on their new roles with immediate effect.  

Roberts said: “Covid-19 has accelerated a number of shifts in our industry. Investments over recent years in digital and technology have laid the foundations for us to flex and adapt quickly as customers needed to shop differently. Around 19% of our sales were digital this time last year and nearly 40% of our sales are digital today.

“While we are working hard to help feed the nation through the pandemic, we have also spent time thinking about how we deliver for our customers and our shareholders over the longer term.   

“We will put food back at the heart of Sainsbury’s. We are already working to make this happen – we have lowered prices on over 1,500 everyday grocery products over the past few months and we will do more of this, focusing on the staple products that our customers buy every day.

“We know that customers are feeling the pinch and we want them to feel confident they will get always get great value, quality and service from Sainsbury’s. We will focus on accelerating product innovation and will bring new and exclusive products to our customers much more often.

“To support our ambition in food, we are accelerating our ambition to structurally reduce our cost base right across the business so we can invest faster back into our core food offer.”