Sainsbury’s to overhaul store estate as it warns on half-year profits

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Sainsbury's to overhaul store estate as it warns on half-year profits
While Sainsbury's will close down some 125 stores as part of its new five-year plan, it insisted the new, simultaneous store openings will lead to an increase in its store estate.
// Sainsbury’s to axe 15 supermarkets & 40 convenience stores but will open 10 new supermarkets & 110 convenience outlets
// It will also shut down 70 Argos stores and relocate a further 80 into its supermarkets
// It’s part of a 5-year plan to cut costs by around £500m
// Sainsbury’s also warned over a £50m hit to underlying half-year profits

Sainsbury’s is set to close down over a hundred stores while opening even more as part of a five-year plan that was revealed in its second quarter update.

The same quarterly update also saw the Big 4 retailer issue a warning over its half-year profit, amid narrowed sales declines.

As part of its five-year turnaround plan, Sainsbury’s said it would close up to 70 Argos stores as it relocates a further 80 into its supermarkets.

The group also said it would close up to 15 large supermarkets and as many as 40 convenience stores, but will open around 10 big stores and some 110 convenience outlets – which Sainsbury’s insisted would increase its store estate.


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Sainsbury’s also announced its financial services arm would stop new mortgage lending “immediately” as part of its five-year plan.

The new strategy, led by group chief executive Mike Coupe, is set to cut costs by around £500 million over the next five years and comes after the failure of its £12 billion takeover attempt of rival Asda.

Sainsbury’s also issued a warning that its underlying half-year profits will endure a £50 million hit.

It blamed the profit warning on the impact of cost cutting, with weather and higher marketing costs also taking their toll.

However, it stuck by full-year forecasts.

Elsewhere, Sainsbury’s recorded a 0.2 per cent fall in like-for-like sales, excluding fuel, over its second quarter to September 21.

This marked an improvement on the 1.6 per cent fall seen in the previous three months.

Sainsbury’s said like-for-like grocery sales rose by 0.6 per cent in the second quarter, but this was offset by a two per cent drop in general merchandise sales – which includes the Argos and Tu businesses.

“Sales momentum was stronger in all areas and we further improved our performance relative to our competitors, particularly in grocery,” Coupe said.

“We have focused on reducing prices on everyday food and grocery products, and expanding our range of value brands, which have been very popular with customers.

“At the same time, we are investing significantly in our supermarkets, driving consistent improvements to service and availability.

“Argos continued to grow market share in key categories, but sales were impacted by reduced promotional activity and the timing of new product releases in gaming and toys.”

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