John Ibbotson / 3rd May 2017
Sainsbury’s results are out and its mixed news, its core business is struggling but its winning with its acquisition of Argos, but what will that mean over all?
“What began as a bolt-on has turned into a lifeboat. For the embattled Sainsbury’s, the Argos acquisition is looking more inspired by the day.
“Incorporating the catalogue brand initially swallowed time and resources – but it has begun paying dividends that flatter these otherwise insipid results and could prove crucial in future.
“Argos is undoubtedly the trump card responsible for the solid increase in group sales.
“But while Mike Coupe will be keen to dismiss the fall in underlying profits as a blip brought on by the cost of the acquisition, this should not distract from the weaknesses in the core Sainsbury’s grocery business.
“The convenience and online offerings are a bright spot in an otherwise challenging picture. Food price inflation has slashed margins and Sainsbury’s continues to lose market share to both Tesco and Morrisons.
“The brand’s much-vaunted turnaround plan has been slower to show results than those of its rivals, who have successfully staunched their losses with aggressive price cuts and structural reforms.
“Argos has so far proved an effective ‘get out of jail card’ for Sainsbury’s. But with inflation biting into consumer spending and the latest retail sales figures showing that the consumption boom is waning, Sainsbury’s must get its core business in order before its catalogue crutch is pulled from under it.”
Read Mike Coupe’s (Sainbury’s CEO) reaction to my comments in Retail Week, and find the full story in these articles: