Sainsbury’s is to end a joint venture with budget supermarket Netto, closing up to nine Yorkshire stores and putting 400 jobs at risk across the north.
Staff will go through a consultation in the coming weeks, with the supermarkets expected to close in August. It is understood that Sainsbury’s will attempt to redeploy affected staff where possible.
Netto has two branches in Leeds, including a flagship store at the Moor Allerton centre, two more each in Sheffield, Doncaster and Hull, and one in Cleckheaton. Most of its other stores are concentrated around Manchester and Liverpool.
The joint venture with Netto’s Danish owner Dansk was created in 2014 on a trial basis as Sainsbury’s looked to take on discount rivals Aldi and Lidl.
However, following a strategic review Sainsbury’s boss Mike Coupe signalled “changing dynamics” that took into account trading data, customer feedback and expansion costs as reasons to wind the operation down.
Mr Coupe said: “Since we first envisaged the trial, almost three years ago, the grocery sector has evolved significantly and we launched our strategy 18 months ago to address these changing dynamics.
“To be successful over the long-term, Netto would need to grow at pace and scale, requiring significant investment and the rapid expansion of the store estate in a challenging property market. Consequently, we have made the difficult decision not to pursue the opportunity further.”
Mr Coupe also flagged a greater focus on Sainsbury’s core business and the integration of Argos, which the grocer is in the midst of acquiring.
The value of the £20 million joint venture will be written down to zero and Sainsbury’s is also expected to incur cash costs of around £10 million to wind the business down.