Sainsbury's has agreed to sell Argos to a newly formed retail investment company backed by former retail executives, marking a major strategic shift as the supermarket group sharpens its focus on its core food business.
The FTSE 100 retailer said it has entered into an agreement to sell Argos to Swift Partners, a company established specifically for the acquisition by former Co-op Group chief executive Richard Pennycook, former Morrisons chief operating officer Trevor Strain and retail technology specialist Matt Truman, alongside investment firm True Capital.
The transaction, expected to complete in February 2027 subject to regulatory approvals, will see Sainsbury's receive cash proceeds of at least £120 million, including upfront and deferred payments and proceeds from the sale of an Argos distribution centre. The retailer said the deal will simplify the business, improve margins and strengthen free cash flow while having a broadly neutral impact on underlying operating profit.
Simon Roberts, chief executive of J Sainsbury plc, said the sale represents the next step in the group's strategy after rebuilding its grocery business.
“As we have strengthened our core food business, we have carefully considered what it will take to create the strongest possible future for Argos,” Roberts said.
“Swift brings retail leadership, operational expertise, technology capability and long-term investment, alongside a deep commitment and belief in the future potential for Argos customers and colleagues.”
He added: “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.”
Argos will continue trading through its existing channels, including standalone stores, online, collection points and more than 300 outlets located inside Sainsbury's supermarkets under long-term commercial agreements between the two businesses. These agreements will also cover Nectar, Nectar360, Habitat and other shared services, allowing continuity for customers while generating ongoing income for Sainsbury's.
Swift Partners said it plans to invest in the Argos brand and accelerate its digital transformation.
Richard Pennycook said the retailer's combination of online operations, standalone stores, store-in-store locations and local fulfilment centres provided “an excellent platform for growth”.
“We believe strongly in Argos's future and see real opportunities to invest and build on its progress,” he said.
“We see clear potential to strengthen Argos's customer proposition, digital capabilities and nationwide reach.”
Sainsbury's said the sale is the latest in a series of strategic divestments, following the disposal of its banking business, ATM operations and Argos Financial Services card portfolio, as it concentrates investment on growing its grocery operations.
Under the deal, Swift will acquire the Argos standalone estate, store-in-store operations, logistics network, Argos Care, Argos Pet Insurance, a distribution centre in Daventry and sourcing offices in Shanghai and Hong Kong. Sainsbury's will retain responsibility for the Argos defined benefit pension scheme.
The businesses expect the operational separation to take up to 24 months after completion, with transitional service agreements in place to ensure continuity for customers, colleagues and suppliers.