Sainsbury’s has agreed to sell its Argos credit cards business for £720 million as the chain continues to retreat from financial services and home in on food.
The card portfolio will be acquired by credit provider NewDay Group.
Argos, which is owned by Sainsbury’s, sees about 20% of all its sales supported by its credit cards, which are held by some two million customers.
The cards offer credit plans and buy now, pay later options for shoppers to manage the cost of their purchases.
Customers are charged 34.9% interest on any remaining balance if they do not pay in full on time.
Argos card customers will not need to take any action as a result of the announcement, the firms said.
Sainsbury’s said the expected £720 million purchase price should reflect the net value of loan balances and provisions at the end of March next year, when the acquisition is set to complete.
It also said a partnership with NewDay will see the creation of new Argos-branded digital credit offerings, which over time will replace current credit cards with a wider array of spending options.
The agreement comes several months after Sainsbury’s struck a deal with NatWest to sell the bulk of its banking business, including personal loans, credit card balances and customer deposits.
It also recently agreed to sell its roughly 1,370 ATM machines to operator NoteMachine.
The chain has stressed that it wants to home in on its main grocery business as part of a “food first” strategy.
Its financial services arm now consists of its commission income businesses, which includes insurance, travel money, and the commission it receives from ATMs still being located across stores.
Sainsbury’s said it expects this to generate an income of at least £40 million by the year to March 2028.
Simon Roberts, Sainsbury’s chief executive, said the sale was a “key milestone” for the group, adding: “NewDay is a complementary fit for us as we strive to give customers at Argos the best value and choice and make it as easy as possible for them to buy the products they need.”