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Sainsbury dumps Netto for Argos

The UK grocery chain is sharpening its focus on online competition rather than the discounters.
July 5, 2016

Thanks to Brexit, it's been a rough week for consumer stocks, particularly those with a UK tilt. Shares in grocer J Sainsbury (SBRY) peaked at 289p this year, but have since suffered a 20 per cent derating. It's debatable how much of that is really down to the UK's decision to leave the European Union given this decline started in April, but suffice to say the share price lost more than another 20p the day the result of the vote emerged.

IC TIP: Buy at 231p

So it seems larger-scale events have overshadowed Sainsbury's decision to terminate its joint venture with Netto-owner Dansk Supermarked Group. In June 2014 the two companies launched a UK-based trial of Netto stores to explore growth opportunities at the discount end of the British grocery market. However, Sainsbury's bosses have said that nearly three years on, the venture requires significant investment and they would rather direct spare cash towards the recent acquisition of Argos-owner Home Retail (HOME).