Sainsbury's to shut 125 UK stores but open even more as part of major overhaul

The UK supermarket chain Sainsbury's will shut 60 to 70 Argos branches but open 80 new ones within existing Sainsbury’s stores. Ten large Sainsbury’s stores and 110 smaller ones will open under the plans.

But up to 15 supermarkets and 40 convenience stores will close. The supermarket chain declined to reveal the locations of the closures which it will now communicate to staff.

A Sainsbury’s spokesperson said there will not be a cut in overall job numbers and that the company will try to move staff affected by closures to new stores. Sainsbury's expects the changes will result in a one-off cost of up to £270m but deliver an ongoing profit boost of £20m a year.

The moves are part of a plan by chief executive Mike Coupe to cut costs by around £500m over the next five years. Sainsbury’s will also stop selling mortgages. The measures come after the supermarket chain’s planned multi-billion-pound merger with Asda was blocked by the competition watchdog over fears prices would rise for shoppers.

Sainsbury’s announced a 0.2 per cent fall in like-for-like sales in its second quarter, which it blamed partly on “unseasonable weather”. Grocery sales rose by 0.6 per cent but general merchandise sales, which include Argos, dropped 2 per cent. The latest store reshuffle shows Sainsbury’s has a lot of work to do, according to Russ Mould, investment director at AJ Bell.

“The supermarket is making progress one small step at a time,” he said. “Its latest results show an improvement with grocery and clothing sales, an intention to shift more Argos counters into Sainsbury’s stores and a plan to tidy up the financial services arm.

“Sainsbury’s turnaround is going to be like a juggernaut, taking a very long time to reposition the business in the right direction.”