Supermarket chain Sainsbury's has agreed to sell Argos to newly formed investment vehicle Swift Partners for at least £120m in order to sharpen its focus on its core grocery operations.

The deal, expected to complete in February 2027, will leave customers largely unaffected, with Argos continuing to operate its 667 stores, including 466 inside Sainsbury's supermarkets, while maintaining Habitat sales, Nectar loyalty benefits and collection services.

Swift is backed by former Co-operative Group CEO Richard Pennycook alongside former Tesco finance director Trevor Strain, retail technology investor Matt Truman and True Capital. The buyer said it plans to invest in Argos's digital capabilities, AI and multichannel operations to accelerate growth.

Sainsbury's expects cash proceeds of at least £120m, comprising at least £70m on completion and £50m in deferred payments over the following three years, although these will be largely offset by separation costs.

The transaction is also expected to reduce lease-adjusted net debt by around £250m, while generating a broadly neutral impact on underlying operating profit and low single-digit accretion to underlying earnings per share. The retailer reiterated FY27 guidance for underlying operating profit of £975m-£1.075bn and retail free cash flow of more than £500m.

The supermarket said long-term commercial agreements covering in-store Argos locations, Nectar, Nectar360 and Habitat would provide ongoing income while preserving continuity for customers and suppliers.

Sainsbury's will also retain responsibility for the Argos defined benefit pension scheme, which had an IAS surplus of £143m at the end of February 2026, although the disposal will result in a non-cash impairment charge of around £350m.

Its hares rose around 3.5% to 4% in early trading following the news.

Sainsbury's acquired Argos as part of its £1.4bn purchase of Home Retail Group in 2016 as it sought to diversify out of groceries, and has since transformed it from a catalogue retailer into a predominantly digital, multichannel business. However, the company believes Argos is better positioned under a dedicated owner as the general merchandise market becomes increasingly competitive.

Simon Roberts, CEO of J Sainsbury, said: "As we have strengthened our core food business, we have carefully considered what it will take to create the strongest possible future for Argos. For Sainsbury's, this is a further step forward in our strategy. Having rebuilt the core strengths of our food business, this agreement allows us to focus all our resources and investment on the significant opportunities ahead."

Richard Pennycook, Swift Partners, added: "Argos's combination - of a strong digital business supported by standalone stores, stores inside Sainsbury's and Local Fulfilment Centres - gives it a distinctive position in the market and an excellent platform for growth. We see clear potential to strengthen Argos's customer proposition, digital capabilities and nationwide reach."

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