Sainsbury’s (SBRY) has sold Argos to newly-formed investment vehicle Swift Partners for £120 million, ending a decade of ownership of the struggling catalogue retailer.
Swift Partners is led by Richard Pennycook, former chief executive of Co-op and current chairman of travel company On the Beach, alongside former Morrisons executive Trevor Strain and retail investment expert Matt Truman.
The sale price represents a sharp discount to the £1.4 billion Sainsbury’s paid for Argos in 2016, a gap analysts say reflects years of underperformance and declining sales contribution.
Argos generated more than £5 billion in sales in 2024, accounting for 20 per cent of Sainsbury’s total revenue, but that figure slid to £4.1 billion this year, representing just under 16 per cent of the group’s £30 billion in takings.
The retailer posted a one per cent drop in sales at Sainsbury’s January trading update, a result that disappointed investors given the trading opportunities presented by Christmas and Black Friday.
Pennycook, who has a personal connection to the brand stretching back decades, said he used to sit around the kitchen table putting green shield stamps into books, referring to the original iteration of the Argos catalogue.
When asked whether the famous catalogue, discontinued in 2021 after nearly half a century, could make a return, Pennycook declined to commit, saying “we all know that the brand has to be relevant for today and for its customers’ needs today.”
On the strategic rationale for the deal, Pennycook was direct, saying “When Matt, Trevor and I wake up in the morning, the first priority we’ll think of is how do we grow Argos.”
He also acknowledged the broader economic headwinds facing the business, but said “a very important part of this business plan going forward will be working closely with our supply base to make sure that we are bringing innovative and great value products to the customer.”
Analysts at Shore Capital described the deal as offering “mutual benefits” to both parties, noting that Swift Partners boasts “some of the greatest” retail talent in the UK.
Richard Hunter, head of markets at Interactive Investor, said Argos had been “something of a thorn in the side for the group,” and that Sainsbury’s had acted shrewdly in offloading the underperforming division.
Despite previously promising investors it was committed to “determined action to accelerate the transformation of Argos,” Sainsbury’s has chosen to redirect its focus toward its core food business under chief executive Simon Roberts.
Argos will not disappear from Sainsbury’s stores entirely, as it will continue to operate across hundreds of the grocer’s sites and customers will still be able to collect Nectar points through the retailer.
Hunter said Sainsbury’s “may well now benefit without the distraction of this struggling part of its offering,” while Argos itself would likely see “a renewed energy and focus as the new owners look to capitalise on what it describes as a strong belief in the company’s future.”