Sainsbury's Stock Gains After Collapse of Argos Sale Talks

By Aimee Look

Shares in J Sainsbury were leading the FTSE 100 index risers after the U.K.'s second largest grocer by market share said talks to sell its Argos business to JD.com, one of China's largest retailers, fell through.

Shares were up 16.20 pence, or 5.07%, to a four-year high of 456 pence in early morning European trading. They are up 18% over the year to date.

On Sunday, Sainsbury's said talks with the Chinese online retailer had ended after JD.com wanted to negotiate a deal that it said wasn't in the interest of shareholders, colleagues or broader stakeholders. The news came one day after Sainsbury's said it was in talks with JD.com over a deal for the unit.

Sainsbury's--which has a 15% share of the U.K. grocery market, according to Worldpanel--added that its 'More Argos, more often' transformation strategy was delivering good progress.

It said Argos performed in line with the board's expectations over the summer, with stronger sales and profitability in the first half compared with the year-earlier period.

Sainsbury's--which bought Argos in 2016 for 1.4 billion pounds ($1.90 billion)--reiterated that it expects underlying operating profit for the retail unit to be around 1 billion pounds, and for free cash flow of 500 million, in fiscal 2026.

The termination of talks highlight potential obstacles for Sainsbury's in shedding the Argos business, Citi analyst Monique Pollard wrote in a note to clients Monday. It should be straightforward, as Argos has already moved around some store teams to separate the brands, but there are some logistical challenges and many Argos stores operate inside Sainsbury's stores, she said.

Meanwhile, Shore Capital analysts said Sainsbury's was right to abandon the talks if the move wasn't in the best interest of shareholders, though a sale to JD would have made sense.

Write to Aimee Look at aimee.look@wsj.com

(END) Dow Jones Newswires

September 15, 2025 04:43 ET (08:43 GMT)