High street and digital retailer Argos has been described as the "unloved child" of supermarket giant Sainsbury's after revealing staggering losses of more than £200 million in its latest financial year.
A Strategy of Neglect?
According to Dan Coatsworth, head of markets at investment platform AJ Bell, Argos "is not performing to the best of its ability" due to strategic decisions by its FTSE 100 owner. He argued that Sainsbury's move to close standalone Argos stores and embed the brand as a concession inside its supermarkets has made the retailer less visible to shoppers.
"While that might save a lot of money on rent and maintenance it also risks Argos no longer being front of mind for someone looking to buy general merchandise," Coatsworth stated. He added that Sainsbury's public "food-first strategy hasn't helped Argos," likening it to a parent openly favouring one child over another.
The Staggering Financial Toll
Accounts filed at Companies House show the stark reality. For the 12 months to 1 March 2025, Argos fell to a pre-tax loss of £223.2 million. This represents a dramatic reversal from the £37.3 million profit recorded the previous year.
Revenue also declined, dropping from £4.22 billion to £4.13 billion. In a major cost-cutting exercise, the company's headcount was slashed from 12,000 to 9,800 employees—a reduction of over 2,000 jobs.
The company blamed a "subdued and highly competitive" market, a significant drop in online traffic, and a "cooler and wetter summer" for missing sales targets. However, it noted a sales improvement in the final six months as web traffic recovered.
To Sell or To Hold? The Billion-Pound Question
The future of Argos was thrown into sharp relief in September 2025, when Sainsbury's confirmed it was in discussions to sell the chain to Chinese e-commerce titan JD.com. Those talks were terminated just a day later, leaving the retailer's fate uncertain.
Dr Gordon Fletcher of the University of Salford said the recent results pose a "challenging question" for Sainsbury's leadership. "The loss of £220m is over five per cent of its reported revenue and contrasts with very modest success last year," he observed.
Dr Fletcher highlighted the core issue: "The story over the past few years has been a case of yo-yoing from profit to loss that reflects how tight the margins are for the UK retail sector." He pointed out that the 'bricks-and-clicks' hybrid model carries extra costs that pure online rivals avoid, making it an increasingly difficult model to sustain.
While selling remains an option, holding may be harder. "Reducing the worker base reduces costs but it does little to benefit the experience of shopping at Argos," Dr Fletcher concluded. Sainsbury's did not respond to requests for comment on the analyst criticisms.
