Sainsbury’s details Argos relocation plan in case for Home Retail Group takeover

Home Retail Group, target of a £1bn bid approach from Sainsbury’s, warned that poor sales at its Argos chain would hurt group profits.

The DIY and gardening chain has always seemed like the neglected sibling at HRG and Sainsbury’s presentation was very heavily focused on its plans for Argos – Homebase barely gets a mention.

The group responded overnight to speculation about the bid from Sainsbury’s [IRDX RSBR] for Argos by announcing that it was in advanced talks with Wesfarmers to sell Homebase for £340m.

Shares in Sainsbury’s (LON:SBRY) fell on Wednesday after it disappointed the City with an update on its potential takeover of Argos owner Home Retail (LON:HOME).

Speaking about the results, chief executive Mike Coupe said: “We have traded well during the festive period in a highly competitive market”. However, we have since seen a sharp rally, bringing price through two notable resistance trendlines to regain the crucial 152p resistance level.

The stores could be relocated into Sainsbury’s supermarkets as concessions.

Moves to narrow the price gap with discounters, improve product availability and customer service have also found favour with consumers, as did a Christmas advertising campaign featuring Mog the cat.

Sainsbury’s General Merchandise sales grew 5 percent in the quarter and clothing almost 6 percent, despite the unseasonal weather impact. Even though you’ve made significant investments digital and your online sales are on the up. Under British takeover rules it has until February 2 to make a firm offer or walk away.

Sainsbury’s, Aldi and Lidl have been delegated the best performing supermarkets during the Christmas sales period – with some astonishing results. Coupe said this morning that the businesses would have a combined non-food revenue of around £6bn, bigger than John Lewis and Amazon’s United Kingdom business.

The figures contrasted with rival Morrisons (LON:MRW) on Tuesday, which reported a 0.2% rise in like-for-like (LFL) sales excluding fuel in the nine weeks to January 3.

While Sainsbury’s beat expectations and are still looking like the strongest of all the big United Kingdom supermarkets right now, investors don’t seem particularly happy with the trading statement, and at 8:15 a.m. GMT (3:15 a.m ET), shares in the company are down by just over 1% to around £2.48 ($3.60) per share. Total sales excluding fuel were down 1.2 per cent, and down 1.7 per cent including fuel.

23 October 2015:- The grocer unveils it is trialling a new store format with easy access to “food to go” so shoppers can buy their lunch or supper within minutes rather than traipse around searching for products.