Sainsbury’s has signed a deal to sell Argos to Swift Partners, with the transaction set to deliver cash proceeds of at least £120m ($161.3m).
The UK supermarket group said the disposal would allow it to focus on its core food business and its Next Level Strategy while providing Argos with dedicated ownership to support its future growth.
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Under the agreement, at least £70m will be paid on completion with a further £50m due over the following three years.
The overall amount includes proceeds from the sale of an Argos distribution centre, as well as upfront and deferred payments.
Sainsbury’s said the final amount is subject to working capital adjustments and is expected to be offset by costs linked to the separation.
The retailer said the transaction is expected to reduce lease-adjusted net debt by about £250m, mainly due to reduced lease liabilities.
It added that the deal will also result in a non-cash impairment charge of around £350m.
The assets included in the sale are Argos’ standalone stores, its in-store concessions inside Sainsbury’s supermarkets, its online retail business, logistics network, Argos Care, Argos Pet Insurance, a distribution site in Daventry, and sourcing offices in Shanghai and Hong Kong.
Swift will assume the leases across the Argos property estate. Sainsbury’s will retain certain limited residual lease liabilities and parental guarantees, which it said are expected to reduce over time.
Sainsbury’s CEO Simon Roberts said: “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.”
Alongside the transaction, Sainsbury’s and Swift have entered long-term commercial agreements covering Argos stores and collection points within Sainsbury’s branches, the Nectar loyalty programme, Nectar360 retail media, and Habitat products.
Sainsbury’s said income from these agreements, together with decreased lease interest costs, is expected to offset the lost contribution from Argos operating profit and the dis-synergies associated with the separation, leaving underlying operating profit broadly unchanged.
The company said the sale is expected to increase underlying earnings per share by a low single-digit percentage and improve retail free cash flow.
Sainsbury’s also reaffirmed its guidance for the 2026/2027 financial year, with total underlying operating profit projected at £975m to £1.07bn and retail free cash flow above £500m.
After completion, the two companies will enter a transitional services arrangement lasting up to 24 months to oversee the separation.
Argos will continue operating within Sainsbury’s during that period, with no disruption for customers.
The deal remains subject to customary regulatory approvals and other conditions. Completion is targeted for February 2027, with full separation expected by February 2029.
Swift is a newly formed company supported by retail figures Richard Pennycook, Trevor Strain and Matt Truman, along with investment company True Capital.
Sainsbury’s acquired Home Retail Group, the parent company of Argos, for more than £1bn in 2016.
