Shropshire Argos stores could close in Sainsbury's bid

The supermarket today said it was still "considering its position" after its surprise announcement last week that it had made an approach for the group in November, which was rebuffed.

In a presentation outlining its decision to bid for Argos, Sainsbury's said up to half of the chain's 734 stores could be shut and instead brought into its supermarkets as concessions.

Sainsbury's chief executive Mike Coupe remained tight-lipped on talks with Home Retail and plans for any improved offer, although he stressed the group would not overpay amid reports that some major shareholders want at least £1.6 billion.

"This is not a deal we need to do at any price," he said.

Sainsbury's has a superstore at Meole Brace Retail Park in Shrewsbury, which is also home to the town's Argos outlet, while Sainsbury's has a branch at Telford Forge Retail Park, near to Telford Bridge Retail Park which is home to an Argos store.

Argos also has outlets in Oswestry, Market Drayton and Whitchurch, while Sainsbury's has superstores in Oswestry, Bridgnorth and Whitchurch.

The chain has not revealed which branches are most likely to face the axe, but they are likely to be those with less than five years left on their leases.

The comments came as Sainsbury's revealed a slightly better-than-expected performance over the Christmas season, with sales in established stores excluding fuel edging 0.4 per cent lower in the 15 weeks to January 9 against a "highly competitive" market.

Its trading failed to match the 0.2 per cent increase in festive sales reported on Tuesday by smaller rival Morrisons in what marked an unexpected result from the embattled group.

But Sainsbury's was the only one of the so-called Big Four to gain market share over Christmas, according to data from Kantar Worldpanel on Tuesday showing its share rising to 17 per cent in the 12 weeks to January 3 from 16.9 per cent a year earlier.

The supermarket hailed the "huge success" of its Mog's Christmas Calamity advert, featuring popular children's book character Mog the Cat, as the sales performance marked a significant improvement on the 1.1 per cent sales drop in the previous three months.

Sainsbury's has until February 2 to make a firm offer or walk away from Home Retail under the City Takeover Panel's so-called put up or shut up deadline.

While Sainsbury's would likely shut up to half of Argos stores there would be an increase in the number of overall sites as it outlined aims to roll out concessions nationwide.

There are already 10 Argos concessions within Sainsbury's stores as part of a trial.

The group said it was a "strategically compelling transaction" which would allow it to take on the might of rivals such as Amazon, with more than 100,000 general merchandise products between Argos and Sainsbury's.

It also sought to answer critics who have questioned cross-selling opportunities, claiming that over 40 per cent of households have shopped in both Argos and Sainsbury's over the past year.

But there was no mention of Homebase, stoking speculation that it would seek to offload the business.

Mr Coupe said he "couldn't be drawn on it".