Argos stores in Tayside and Fife are under threat of closure as plans were announced today to shut more than 60 shops.
Sainsbury’s, which owns Argos, said it planned to close between 60 and 70 standalone Argos shops – but open 80 new Argos outlets within its supermarkets.
Argos operates shops in Dundee’s Overgate Shopping Centre, Perth High Street, Arbroath and Montrose in Angus and outlets in Leven, Glenrothes, Kirkcaldy, Dunfermline and Cupar in Fife.
It also has sites within Sainsbury’s in Dundee, Kinross and Rosyth.
A Sainsbury’s spokesperson said it was too early in the process to say what shops will close. The firm will also review its supermarket estate.
In a trading update today, Sainsbury’s said: “Store estate review and growth plans will result in: around 10 new supermarkets and 10-15 closures; around 80 new Argos in Sainsbury’s and 60-70 Argos closures; around 110 new convenience stores and 30-40 closures.
“We expect the closures to deliver an ongoing net operating profit benefit of around £20 million per year.
“We expect the one-off cost of closures and impairments to be £230m to £270m, of which the cash cost will be £30m to £40m.”
The company declined to say how many jobs would be impacted by the changes.
The five-year plan, being led by chief executive Mike Coupe, is set to cut costs by around £500m over the next five years and comes after the failure of its ill-fated £7.3 billion takeover tilt for rival Asda.
Sainsbury’s also revealed narrowed sales declines in its second quarter, but warned over a £50m hit to underlying half-year profits.
It blamed the interim profits warning on the impact of cost cutting, with weather and higher marketing costs also taking their toll, though it stuck by full-year forecasts.
Sainsbury’s also announced its financial services arm would stop new mortgage lending “immediately” as part of its five-year plan.
It comes amid reports the group is looking to sell off its mortgage book, following rival Tesco’s recent move to offload its home lending business.
Details of the plans came as Sainsbury’s announced a 0.2% fall in like-for-like sales, excluding fuel, over its second quarter to September 21.
This marked an improvement on the 1.6% fall seen in the previous three months.
Sainsbury’s said like-for-like grocery sales rose by 0.6% in the second quarter, but this was offset by a 2% drop in general merchandise sales – which includes the Argos business.
Mr Coupe said: “Sales momentum was stronger in all areas and we further improved our performance relative to our competitors, particularly in grocery.
“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.”