Sainsbury’s plans for £6bn 
retail giant under scrutiny

Sainsbury's CEO Mike Coupe.
Sainsbury's CEO Mike Coupe.
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The City will want to hear more about Sainsbury’s plans to overhaul Argos when the supermarket posts its annual results this week.

Sainsbury’s posts full-year results on Wednesday, after an eventful year which has seen the group return to sales growth and win a lengthy battle to take over Argos owner Home Retail Group in a transformational deal.

The Big Four grocer won a four-month takeover tussle in early April to snap up Home Retail for £1.4bn; a move the group said will create the UK’s largest non-food store.

It will be a £6bn giant, with around 2,000 stores, concessions and click-and-collect outlets.

Sainsbury’s said the move will create a “multi-product, multi-channel” business with fast delivery networks.

It is a daring move for boss Mike Coupe, who took over from predecessor Justin King in July 2014. But it is hoped that the strength of Argos will help Sainsbury’s see off the mounting threat from online retailer Amazon and German rivals Aldi and Lidl.

Full-year figures will show the impact of another tough year for the supermarket sector, with analysts pencilling in a 16 per cent fall in underlying profits to £574 million.

But Mr Coupe has made recent inroads into shoring up trading, with the group posting its first quarterly like-for-like sales growth for more than two years in March.

It said like-for-like retail sales excluding fuel lifted by 0.1 per cent in the fourth quarter, compared with a fall of 0.4 per cent in the third quarter.

The most recent industry data also shows Sainsbury’s to have notched up the highest sales growth of the Big Four.

Figures from Kantar Worldpanel showed 1.2 per cent sales growth for the chain in the 12 weeks to March 27, despite its decision in February to end multi-buy and buy-one-get-one-free promotions.

The group also recently said it would end its Brand Match pricing strategy in favour of lower regular prices on key products.

Analysts at Barclays said they will be looking for comments in the full-year results about the cost of recent price moves.

They said: “The company has repeatedly stated its determination to remain competitive on price in the market – and any sense of how expensive this may prove will be crucial.”