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Sainsbury’s announces store estate overhaul

Sainsbury’s is to undergo a store estate overhaul which will see it close over 100 stores, while also opening and relocating others, as it aims to save £500m over the next five years.

The ‘Big Four’ grocer revealed it is set to close 10-15 of its large supermarkets, with the closure partially offset by the opening of 10 new stores. The company will also close 70 Argos stores and relocate another 80 sites into its supermarkets.

Some 40 convenience stores will also shutter but Sainsbury’s added it has plans to open 110 more.

The announcement was made in the company’s latest Q2 trading update in which it also warned its expects first half underlying profit before tax to reduce by c.£50m year on year, due to the “combined impacts of the phasing of cost savings, unseasonal weather against a strong comparative period last year and higher marketing costs”.

However, it added in the second half of the year it anticipates to benefit from the “annualisation of last year’s colleague wage increase and a normalisation of marketing costs and weather comparatives”.

It said that while retail markets remain “highly competitive” and the consumer outlook remains “uncertain”, it remains on track to deliver full-year 2019/20 underlying profit before tax in line with consensus expectations.

During the 12-week period Sainsbury’s reported that second quarter total retail sales were up 0.1%, with like-for-like sales down 0.2%. Grocery and clothing sales increased by 0.6% and 3.3% respectively, with general merchandise sales having decreased by 2%.

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

He added: “Clothing sales were boosted by clearance activity and strong online growth and Tu continued to grow market share. Financial Services sales were in line with expectations.”

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