Can a team of retail veterans solve Argos’ catalogue of woes?
The death of the Argos catalogue in 2021 after nearly half a century prompted a period of mourning for many in Britain – including the retailer’s new owner.
“I used to sit around the kitchen table putting green shield stamps into books,” Richard Pennycook said on Friday, referring to the original iteration of the catalogue.
Pennycook, the former chief executive of Co-op, now has the power to bring back this very catalogue. On Friday, he led Swift Partners, a newly-formed company, in buying Argos from Sainsbury’s for £120m.
“That’s how far back my association with Argos goes,” Pennycook said, though he refused to be drawn on whether the catalogue would return. “At the same time, we all know that the brand has to be relevant for today and for its customers’ needs today.”
Sainsbury’s sale of Argos brings to an end its 10-year ownership of the struggling retailer, which has long dragged on otherwise strong growth at the UK’s second-largest supermarket.
Swift Partners will be headed up by Pennycook, who is currently the chairman of travel company On the Beach, as well as former Morrisons executive Trevor Strain and retail investment expert Matt Truman.
Sainsbury’s and Swift partners hailed the deal as a win-win. “Simon [Roberts, chief executive of Sainsbury’s] has been very clear that the future of Sainsbury’s is brilliant food, so when Simon and his team wake up in the morning, that’s the first priority they think of,” Pennycook said.
“When Matt, Trevor and I wake up in the morning, the first priority we’ll think of is how do we grow Argos.”
Argos just 16 per cent of Sainsbury’s sales
The deal offers “mutual benefits” to Sainsbury’s and Argos’ new owners, according to analysts at Shore Capital. Swift Partners boasts “some of the greatest” retail talent in the UK, the broker said.
Analysts described the deal as a coup for Swift, who has snapped up Argos for a fraction of the £1.4bn Sainsbury’s paid for the catalogue retailer in 2016.
Argos sales have declined as a proportion of its owner’s takings in recent years. In 2024, the catalogue retailer took more than £5bn, accounting for 20 per cent of Sainsbury’s total sales.
But the retailer’s sales fell to £4.1bn this year, making up just less than 16 per cent of the group’s £30bn takings.
Sainsbury’s has been driving resources into an attempted turnaround of Argos, working to widen customer service and product availability as part of its “more Argos, more often” strategy.
Despite these efforts, the supermarket said last month that the retailer’s growing sales volumes were “offset by the impact of subdued consumer spending” on its prices, dragging the value of sales down by 0.5 per cent.
Argos ‘thorn in side for Sainsbury’s’
Pennycook said on Friday that he is aware of the challenges posed by the fragile spending confidence of UK consumers. “But a very important part of this business plan going forward will be working closely with our supply base to make sure that we are bringing innovative and great value products to the customer,” he said.
“Argos had been something of a thorn in the side for the group,” said Richard Hunter, head of markets at Interactive Investor.
Hunter said that the retailer’s ailing health was made clearest at Sainsbury’s January trading update, when Argos posted a one per cent drop in sales despite the trading opportunities posed by Christmas and Black Friday.
Though the supermarket had recently promised investors that it was committed to “determined action to accelerate the transformation of Argos,” it has acted shrewdly to throw in the towel, Hunter said.
But Argos is not out of sight for Sainsbury’s. The catalogue retailer will continue to operate hundreds of the grocer’s sites, and will still offer Nectar points.
“However Sainsbury may well now benefit without the distraction of this struggling part of its offering. […] For its part Argos will no doubt see a renewed energy and focus as the new owners look to capitalise on what it describes as a strong belief in the company’s future,” he said.