Dan Coatsworth, head of markets at AJ Bell, said: “There are a lot of similarities between Sainsbury’s and Marks & Spencer – both have strong food arms offsetting weakness elsewhere.
“Sainsbury’s clearly had a bumper Christmas for grocery sales, enjoying notable success with its premium range.
“However, Argos continues to be the thorn in its side with another period of weakness.
“This persistent underperformance only strengthens the argument for Sainsbury’s to get shot of Argos as fast as it can.
“The market is losing patience about the non-grocery side given the negative share price reaction to Sainsbury’s figures.
“Without the clothing and general merchandise contributions including Argos, investors would have been singing from the rooftop about Sainsbury’s Christmas performance.
“The fact it has sustained strong momentum in the food arm for so long shows it wasn’t just a stroke of luck. It has clearly hit upon the right recipe for success.
“Chief executive Simon Roberts will be under increasing pressure to do something to remove the shackles on the group.
“A bid approach for Argos was rejected last year, with the implication that China’s JD didn’t offer enough.
“Formally putting Argos up for sale might flesh out more interested parties.
“Sainsbury’s might even have to take the view that it doesn’t really matter what price it gets for Argos, simply offloading the business would help to sharpen the company’s focus and potentially deliver greater benefits in time.”
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