BRITISH supermarket Sainsbury’s, which failed to merge with Walmart-owned Asda earlier this year, unveiled Wednesday (25) a major cost-cutting plan.
Sainsbury’s will seek to axe £500 million in costs over the next five years, it announced in a trading update, which also revealed sliding quarterly sales amid fierce competition.
The company will shutter up to 70 standalone branches of catalogue division Argos- but will also open another 80 Argos units inside its existing Sainsbury’s stores.
Sainsbury’s will also close 15 large supermarkets and 40 smaller convenience stores, but at the same time will also open ten big stores and some 110 convenience outlets.
The London-listed retail giant did not specify how many jobs are due to be shed, but the overhaul is forecast to cost between £230m and £270m.
And it warned that this year’s first-half profits would take a £50m hit from the restructuring, unseasonal weather and high marketing costs.
Sainsbury’s also revealed falling sales in the second quarter of the group’s financial year, or 12 weeks to September 21, compared with a year earlier.
Britain’s long-established supermarkets are suffering from the weak economic climate before the nation’s departure from the European Union next month.
They also continue to battle intense competition from German-owned discounters Aldi and Lidl, as well as online rival Amazon.
Back in May, a mega-merger of Sainsbury’s and British-based rival Asdsa collapsed because regulators blocked the deal on the grounds it would spark higher prices and damage competition.