Argos just posted a £223m loss and axed over 2,000 jobs. For a retailer that made £37m profit the year before, that’s a brutal turnaround. The Sainsbury’s-owned chain saw revenue slip from £4.22bn to £4.13bn in the year to March 2025, whilst its workforce shrunk from 12,000 to 9,800 employees. So what’s behind this spectacular nosedive?
The Perfect Storm That Hit Argos
Let’s be honest, 2024 wasn’t kind to general merchandise retailers. Argos blamed a “subdued and highly competitive” market, which is corporate speak for “everyone’s skint and shopping elsewhere.”
The real kicker? Online traffic tanked in the first half of the year. When you’re a digitally-focused retailer, that’s like a restaurant running out of tables. Add a cooler, wetter summer (cheers, British weather), and seasonal sales flatlined harder than your motivation on a Monday morning.
The Price War Nobody Wins
Argos posted an underlying pre-tax loss of £73m, driven largely by slashed profit margins. Translation: they were stuck in a brutal price war, promoting heavily just to keep customers through the door. When everyone’s racing to the bottom on price, nobody makes money, they just make noise.
The Comeback Attempt
Not all doom and gloom, though. The second half of the year showed signs of life. Online traffic recovered, sales improved, and Q4 actually returned to year-on-year growth. Baby steps, but steps nonetheless.
Argos is now focused on getting customers to shop more often and spend more per visit—the classic “bigger baskets” strategy. They’re also streamlining operations whilst maintaining their market-leading convenience (think same-day delivery and Click & Collect).
The Sainsbury’s Dilemma
In September 2024, Sainsbury’s entered talks to sell Argos to Chinese e-commerce giant JD.com, a retailer with 600 million annual customers. Plot twist: they pulled the plug a day later.
Sainsbury’s paid over £1bn for Argos less than a decade ago. Now it’s the UK’s second-largest general merchandise retailer after Tesco, but clearly not generating the returns Sainsbury’s hoped for. The aborted sale suggests either the price wasn’t right, or Sainsbury’s still sees long-term value in turning Argos around.
What’s Next for Argos?
The retailer’s betting on digital transformation and a stronger product offering to pull through. They’ve already simplified their operating model—code for “we’ve cut costs and jobs”—but the question remains: can Argos compete in a market where Amazon dominates and everyone’s watching their wallets?
The Q4 growth hints at potential, but one quarter doesn’t make a trend. With inflation still squeezing household budgets and competition fiercer than ever, Argos needs more than convenience, it needs a compelling reason for people to choose it over the alternatives.
The Bottom Line: Argos is at a crossroads. The losses are significant, the job cuts are painful, and the market remains brutal. But if they can leverage Sainsbury’s scale, sharpen their digital game, and offer genuine value, there’s a path back to profitability. It just won’t be quick or easy.
FAQ
Q1: Why did Argos lose so much money in 2024-25?
A: A combination of weak consumer demand, fierce competition, and heavy discounting crushed profit margins. Poor weather also hit seasonal sales, whilst online traffic dropped significantly in the first half of the year.
Q2: How many jobs did Argos cut?
A: Argos reduced its workforce from 12,000 to 9,800 employees—a cut of 2,200 jobs as part of operational streamlining efforts.
Q3: Is Sainsbury’s selling Argos?
A: They explored selling Argos to Chinese retailer JD.com in September 2024 but terminated talks a day later. For now, Argos remains part of the Sainsbury’s group.
Q4: Did Argos show any positive signs?
A: Yes. The second half of the year saw improving online traffic and sales, with Q4 returning to year-on-year growth. It suggests the worst may be behind them, though challenges remain.
Q5: What’s Argos doing to recover?
A: They’re focusing on digital improvements, strengthening their product range, encouraging larger basket sizes, and simplifying operations whilst maintaining their convenience advantage over competitors.
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Effective Date: 15th July 2025
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