Sainsbury's/Argos
Why did it take Sainsbury's a decade to get free of a business it bought for £1.4 billion in 2016. There was a collapsed sale and the final handover won't finish until 2029.
ALL BREAKDOWNSTHE BREAKDOWN
8/4/20265 min read
Sainsbury's spent a decade making Argos impossible to sell.
It paid £1.4 billion for Argos in 2016.
Then agreed to sell it for £120 million ten years later.
Why did it take Sainsbury's a decade to get free of a business it bought for £1.4 billion in 2016. There was a collapsed sale and the final handover won't finish until 2029.
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THE SETUP
In 2016, Sainsbury's was stuck in second place behind Tesco, being squeezed from below by Aldi and Lidl. Buying Argos was chief executive Mike Coupe's way out: less food, more general merchandise, better margins.
"More confident than ever" is how Coupe described it, waving off investors who worried about the currency risk on all those imported electronics.
The logic wasn't complicated. About 4 in 10 Argos shoppers already shopped at Sainsbury's, and Sainsbury's had spare floor space in its big supermarkets. Put an Argos counter in the corner of every branch and a customer who only came in for milk might leave having also bought a kettle.
The strategic case went further than sharing floor space. Argos gave Sainsbury's a general merchandise business with far higher margins than groceries, at a time when Aldi and Lidl were grinding down food margins year after year. It also gave Sainsbury's Nectar, its loyalty scheme, a much richer picture of what the same customer bought across food and big-ticket electronics, in one dataset.
And it gave Sainsbury's a same-day collection network already built and already trusted, years before click and collect became something every retailer felt it had to offer.
This wasn't just about sharing space. One Nectar card would now track what a customer bought at both businesses, making it easier to target them with offers for both. And one collection network would now serve both businesses instead of two separate ones, cutting the cost of running each.
Sainsbury's paid £1.4 billion for Home Retail Group, Argos's parent, and completed the deal in September 2016.
The key question: what happens once people stop going to a shop for a toaster and just order one on their phone instead?
Argos was built around a catalogue and a counter. Online shopping, especially Amazon, was making both of those less necessary every year.
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THE PLAYBOOK
1. Fuse the stores together and chase the savings
Sainsbury's had 845 standalone Argos stores on completion day. The plan was to close most of them and build small Argos counters inside its own supermarkets, saving on rent and bringing more shoppers into Argos.
By 2024, that plan called for as few as 160 standalone stores, against more than 450 living inside Sainsbury's supermarkets. Every one of those counters meant plugging Argos's tills, stock system and delivery network into Sainsbury's own systems, even though the two had never been built to work together.
That created a problem. Once Argos and Sainsbury's are sharing the same infrastructure, the shops don't run as a standalone business. So you can't just sell Argos to someone else and hand over the keys. You'd have to untangle the two systems first and that takes time no matter who's buying.
Sainsbury's own board knew that trade-off when they approved the plan and committed fully.
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Takeaway: joining two businesses together can save you money today. Getting them apart again later almost always costs more than the saving was worth.
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2. Sell the bit that still works, keep the bit that doesn't
Before Sainsbury's tried to sell Argos itself, it sold Argos Financial Services, the credit arm behind a fifth of Argos sales, to NewDay for £720 million in 2024.
That single sale brought in six times what the rest of Argos fetched two years later. A credit book with predictable cash flows is a different animal to a shrinking catalogue retailer and buyers price them very differently.
What was left for Swift Partners in 2026 was Argos itself: the shops, the stock and the staff, minus the one part of the business that actually made good money on its own.
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Takeaway: If a business is being sold off piece by piece, ask which piece you're being shown. The good one usually sells first.
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3. Try the clean break, then settle for the messy one
In September 2025, Sainsbury's confirmed it was in talks to sell what remained of Argos to Chinese retailer JD.com.
The talks lasted a single day. JD.com came back wanting, in Sainsbury's own words, "a materially revised set of terms and commitments," and Sainsbury's walked away.
One City analyst explained why a clean sale was always going to be hard: Argos's shops sit inside Sainsbury's supermarkets, so you can't hand the business to a new owner without untangling the two first.
Ten months later, Sainsbury's agreed a different kind of deal, with a new firm called Swift Partners, run by former Co-op boss Richard Pennycook and former Morrisons finance chief Trevor Strain.
Instead of one clean payment, the deal is being paid in pieces: at least £70 million when it completes, another £50 million spread over the next three years and Sainsbury's also has to book a £350 million loss on its books just to get the deal done.
Completion is due in February 2027. The two businesses won't be fully separated until 2029, thirteen years after Sainsbury's first bought Argos.
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Takeaway: if you want the option of a fast, clean exit one day, don't let the business get too entangled with yours today. The deeper you integrate, the more that future exit will cost you, and the longer it will take.
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WHAT PEOPLE MISS
Mike Coupe, who did the deal and defended it all the way, left Sainsbury's in 2020. Simon Roberts, his successor, spent the next six years closing stores, selling the credit book, watching a Chinese buyer walk away and finally signing off a deal at a fraction of the price Coupe paid.
Argos was never only fighting Sainsbury's floor space. It was fighting a phone in every customer's pocket and it was losing that fight.
In the year to March 2025, Argos swung to a £223 million pre-tax loss, reversing a £37 million profit, on revenue that fell to £4.1 billion. None of that came from concessions or till systems. That's a catalogue retailer's own market shrinking.
The £1.4bn Sainsbury's paid in 2016 and the £120m Swift Partners agreed in 2026 are not the same comparison. The first number is what Argos was worth as its own business, before Sainsbury's bought it. The second is what was left after ten years of being tied into Sainsbury's systems, after selling off the financial services arm separately and after ten years of losing ground to online shopping.
Coupe made the decision to buy Argos and integrate it this closely. Roberts, six years after Coupe left, was the one who had to sell it at the reduced price that decision created.
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THE PAPER TRAIL
Sainsbury's deal, desperate or inspired? (2016)
5 minute watch
The Financial Times' take from the day the Home Retail Group deal was struck in 2016, questioning whether Sainsbury's was buying growth or buying trouble.
https://www.youtube.com/watch?v=1bRhANT4Cew
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Argos was a bad buy, but Sainsbury's doesn't need to sell at a silly price (2025)
4 minute read
Written the day the JD.com talks collapsed, arguing the original 2016 logic wasn't as unreasonable as the hindsight version makes it look.
https://www.theguardian.com/business/nils-pratley-on-finance/2025/sep/15/argos-sainsburys-sale-jdcom
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Sainsbury's sells Argos to Swift Partners for $161M a decade after $1.8B deal
2 minute read
The clearest single account of the final numbers: the £350 million impairment, the £223 million Argos loss the year before and the buyer behind Swift Partners.
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Can a team of retail veterans solve Argos' catalogue of woes?
3 minute read
Richard Pennycook's own account of buying Argos, including his childhood memory of Green Shield Stamps, his refusal to rule out reviving the printed catalogue, and his line about Sainsbury's and Swift now having completely separate morning priorities.
https://www.cityam.com/can-a-team-of-retail-veterans-solve-argos-catalogue-of-woes/
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