Last week Sainsbury’s added its name to a “long list of firms that have cut jobs since the pandemic began”, says Ben Chapman in The Independent. The supermarket will axe about 3,500 jobs, mostly across its Argos stores, and supermarket meat, fish and deli counters, as it adapts to a “rapid shift towards online shopping”. The company has blamed the pandemic, which it argues has accelerated the decline of bricks-and-mortar shopping, with “almost 40% of Sainsbury’s sales now online, compared to 19% a year ago”.
The job losses are bad news for workers, but sadly necessary to facilitate “much-needed” price cuts, says Lex in the Financial Times. These low prices will help Sainsbury’s deal with the “fiercer” post-lockdown competition from the likes of Aldi. Closing down Argos, which faces intense competition from Amazon – as well as customer complaints that “it is often out of stock” – also frees up working capital and space. This could be used more productively to offer click-and-collect at every Sainsbury’s supermarket and build new fulfilment centres to improve availability and range.
The job cuts may make business sense, but they are “still hard to swallow”, given that we’re still in the middle of a national crisis, says Ben Marlow in The Daily Telegraph. What’s makes them particularly galling is that even Sainsbury’s admits that Argos is the “standout part of the group right now”, helping two million new customers reconnect with the chain during the last nine months. It’s no way to treat a workforce that “heroically kept turning up day-in, day-out during lockdown”, and deserves far more than Sainsbury’s offer of a one-off 10% bonus.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
A sour taste
Cutting Argos and its employees adrift is bad enough, but Sainsbury’s decision to pay £231m in dividends, via a £71m interim dividend and a £160m special payout, leaves “an even sourer taste”, says Alistair Osborne in The Times. This is because the supermarket has benefited from “a taxpayer-funded business-rates holiday” that almost exactly matches the amount of money it is giving to its shareholders. While it’s true that many small investors rely on the dividends for income, much of the money will end up in Qatar, where the Qatar Investment Authority owns over a fifth of the supermarket.
Sainsbury’s isn’t the only supermarket to benefit from taxpayers’ largesse, says Nils Pratley in The Guardian. The entire sector is set to receive £1.5bn in special relief this year. The aim was to help shops that had to close during the first lockdown.
However, supermarkets not only remained open but also “enjoyed a boom” that more than compensated for any Covid-19 costs that they had to incur. Sadly, while Sainsbury’s, Tesco or Morrisons should seriously think about “returning a few quid to the Treasury”, there is “roughly zero” chance of this actually happening.
-
IMF suggests “refinements” to Rachel Reeves’s fiscal rulesThe IMF has upgraded the UK’s growth forecast but wants Reeves to refine her fiscal rules to avoid unnecessary spending cuts or tax rises
-
Invest like a tortoise, not a hare to avoid market volatilityOpinion Hassan Raza, Portfolio Manager at CG Asset Management, highlights three favourite investment companies
-
Look to British stocks to lead the charge as the Magnificent Seven falterOpinion Gervais Williams, fund manager, The Diverse Income Trust, picks three British stocks where he'd put his money
-
Why the 'Great Rotation' away from US assets will boost BritainOpinion Disenchanted investors have only just begun to withdraw capital from America, says Jeremy McKeown.
-
Bargain Britain boasts both value and momentumInterview Ian Lance, manager of the Temple Bar Investment Trust, tells Andrew Van Sickle that the outlook for UK stocks has improved and healthy long-term returns are in prospect
-
Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
-
Primark owner Associated British Foods is an overlooked gem going cheap — should you buy shares?Associated British Foods, the owner of Primark, is a family-owned business, which means it is passed over by the increasingly popular passive investment funds. That spells opportunity for private investors, says Jamie Ward.
-
UK equities are set for a bull market – buy nowInvestors shouldn’t wait for a crisis to buy UK equities, says Max King. Do so now, in the expectation of much better returns in due course
-
How to find top-quality income picks in the UK stock marketFour top-quality UK stock market picks according to Iain Pyle, manager of Shires Income Trust
-
How to save the dying UK stock marketThe UK stock market is in long-term decline. To fix that, we must first recognise why equity markets exist and who they should serve
