SAINSBURY’S shares lifted two per cent as it announced a major shake-up of its estate that is expected to end with more outlets.
Executives said they will close up to 15 large supermarkets and as many as 40 convenience stores, while opening 10 big stores and 110 convenience outlets under the plan.
It will also close 125 Argos stores and supermarkets but open more amid an overhaul to cut costs and increase its overall estate, it said.
The Herald understands that up to 200 stores will be opened across the country, including potentially in Scotland, leaving a UK net gain of between 75-100.
It currently has around 1,200 stores across the UK and 100 north of the Border, where it has already introduced a new format.
READ MORE: Sainsbury's closing more than 100 stores in major business overhaul
In Craigleith in Edinburgh, the Argos has moved from a separate unit to a sizeable section of the Sainsbury’s supermarket.
The group said it will shut up to 70 Argos shops and open around 80 instead within its supermarkets.
Mike Coupe, Sainsbury’s chief executive, said “we think it’s a good news story for our colleagues” without offering further details on locations and staff numbers affected.
The five-year plan, being led by Mr Coupe, is set to cut costs by around £500 million over the next five years and comes after the failure of its ill-fated £7.3 billion merger move with rival Asda.
The move is part of a process to identify underperforming outlets and growth opportunities.
READ MORE: Sainsbury’s sees sales tumble further amid ‘tough’ supermarket environment
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.
The company is considering its options for its mortgage book of 7,000 customers, including a potential sale, following rival Tesco’s recent move to offload its home lending business.
READ MORE: Sainsbury's chiefs lambasted at AGM
Executives also said they do not plan to put any more cash into funding Sainsbury’s Bank.
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.
“We have focused on reducing prices on every day food and grocery products and expanding our range of value brands, which have been very popular with customers.
“At the same time, we are investing significantly in our supermarkets, driving consistent improvements to service and availability.”
He added: “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.
“Clothing sales were boosted by clearance activity and strong online growth and Tu continued to grow market share. Financial Services sales were in line with expectations.”
A major overhaul of the supermarket’s basics range is also ongoing and will be expanded after the company admitted the budget lines had been underperforming.
The company also said that it plans to undertake a rebrand of its Taste The Difference range.
Sainsbury’s also said it would reduce its debts by £750m over the next three years, a target increased from £600m.
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