Analysts claim that up to 330 Argos stores could close if Sainsbury’s succeeds in its takeover of Home Retail Group.
The Big Four chain lost its chief rival for the ownership of Home Retail Group on Friday when Steinhoff, then the highest bidder, withdrew its £1.4bn offer in favour of a takeover of Darty’s. Matching the bid, Sainsbury’s now appears to be firmly set to take over the business, provided HRG’s board of directors recommends that shareholders accept the offer.
However, Exane BNP Paribas Analyst John Kershaw has predicted that 330 of Argos’s 840 British stores could close and be replaced with concessions inside Sainsbury’s outlets. He also estimated that 270 new Argos ‘shop in shop’ stores would be added to Sainsbury’s stores, in addition to 770 new click-and-collect points.
This is in stark contrast to the words of Sainsbury’s Chief Executive Mike Coupe, who claimed on Friday that fewer than 200 stores would be closed, as well as more conservative predictions from the City.
When questioned on Friday, Coupe revealed that the average remaining lease time on Argos outlets is less than five years, throwing some doubt on his figures. Although Coupe refused to go into great detail regarding how many stores would be closed he insisted that, in the long run, the deal would see more jobs created at Argos.