Sainsbury’s will get its toy – but is that a good thing?

Outlook

The supermarket would benefit from Argos’ logistics business (Getty Images)

I teased Sainsbury’s this week by likening its pursuit of Argos to my daughter’s pursuit of Blu Blu the cuddly dolphin. We’ve since learned that Blu Blu had a difficult swim through Christmas but looks set to jettison Homebase, its unloved fellow member of the Home Retail Group pod. Good news?

There is a price deflation, discounting, and a digital transformation strategy that looks like it ought to work, but is struggling to produce the numbers the City wants.

There are grounds for optimism, should you go looking for them. While the price for Homebase isn’t as good as it appears (a big chunk gets swallowed by restructuring costs and pensions) it is better than most expected the DIY retailer to fetch.

Argos is doing quite well in some product categories, such as big, fancy TV sets, and IT, and it is excited about the performance of concessions in other stores (some of which it will lose assuming the £340m sale of Homebase to Wesfarmers completes).

But it did badly in other categories, and this was an underwhelming result.

The consensus was that both developments make it more likely that Sainsbury’s will get its Blu Blu. But what if Sainsbury’s shareholders buy the consensus view that these results were really poor and just say “no”? Argos’ latest numbers might not make life easier for the grocer’s oceanic ambitions after all.