LONDON (dpa-AFX) - J Sainsbury plc (SBRY.L), one of the UK's largest supermarket chains, said on Friday it has agreed to sell its general merchandise business Argos to Swift Whistle Midco Limited, a newly established company backed by retail executives and specialist retail investors, in a deal expected to generate at least £120 million in cash.
Sainsbury's said the disposal supports its strategy of focusing on its core grocery business, following earlier sales of its banking business, ATM operations and the Argos Financial Services cards portfolio. The company expects the transaction to create a simpler, more focused business with higher margins, stronger growth prospects and improved free cash flow generation.
Swift will acquire Argos' standalone stores, store-in-store operations, online and logistics businesses, along with Argos Care, Argos Pet Insurance, a distribution centre in Daventry, and sourcing offices in Shanghai and Hong Kong.
Swift Partners is backed by retail leaders Richard Pennycook, Trevor Strain and Matt Truman, together with retail-focused investment firm True Capital.
Sainsbury's expects to receive at least £70 million when the deal closes, which is anticipated in February 2027, including proceeds from the sale of an Argos distribution centre. The remaining £50 million is expected to be paid over the following three years, although those proceeds are expected to be largely offset by separation costs incurred during the same period.
Sainsbury's said the transaction is expected to increase underlying earnings per share by a low single-digit percentage, while having a broadly neutral impact on underlying operating profit.
The retailer said the transaction is expected to reduce lease-adjusted net debt by around £250 million. Sainsbury's will retain responsibility for the Argos defined benefit pension scheme, which reported a surplus of £143 million as of February 28, 2026. The sale is also expected to result in a non-cash impairment charge of about £350 million.
The companies have also entered into long-term commercial agreements covering Argos stores and collection points within Sainsbury's supermarkets, as well as the Nectar loyalty programme, Nectar360 retail media services and the Habitat brand.
'For Sainsbury's, this is a further step forward in our strategy. Having rebuilt the core strengths of our food business, this agreement allows us to focus all our resources and investment on the significant opportunities ahead,' said Simon Roberts, Chief Executive.
On the LSE, Sainsbury's shares were up 3% at 366.39 pence.
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