London: Britain’s second-largest grocer J Sainsbury Plc is in talks to sell its general merchandise unit Argos to Chinese eCommerce firm JD.com Inc.
“A transaction with JD.com would accelerate Argos’ transformation,” Sainsbury’s said in an emailed statement last Saturday, adding JD.com would bring retail, technology and logistics expertise and invest to drive Argos’ growth.
“The terms of any possible transaction would include commitments from JD.com in relation to Argos for the benefit of customers, colleagues and partners,” Sainsbury’s said, without providing details on any financial terms.
Argos, which Sainsbury’s acquired in 2016, has been a drag on its parent’s business at times, but sales at the chain rose 4.4% in the first quarter, helped by warm and dry weather.
The company said in July it’s making good progress on driving footfall to Argos with strong customer traffic and growing volumes in the period.
The British grocer said no agreement has been reached and there is no certainty at this stage that any transaction will proceed.
JD.com didn’t immediately respond to an email seeking comment outside of business hours. The Telegraph newspaper earlier reported on the talks between Sainsbury’s and JD.com.
British retailers have been grappling with rising expenses, including tax rises and a higher minimum wage introduced in the government’s revenue-raising budget.
Sainsbury’s announced plans earlier this year to cut 3,000 staff and close its remaining cafes as it steps up a cost-saving drive.
Shares of London-listed Sainsbury’s have risen just 6% in the past 12 months, trailing the benchmark FTSE 100 index, which climbed roughly 12% in the same period. — Bloomberg
