It came as Home Retail said it was in advanced talks for the £340 million sale of its Homebase DIY business to Australian retailer Wesfarmers.
Mike Coupe, chief executive of Sainsbury’s, repeated that his group was “considering its position” after it revealed last week that it had made an approach to Home Retail in November which had been rebuffed.
Sainsbury’s said up to half of the Argos chain’s 734 stores could be shut and instead brought into its supermarkets as concessions.
Coupe would not be drawn on any plans to improve the undisclosed terms of its cash-and-shares approach for Home Retail.
But he stressed he would not overpay amid reports that some leading institutional investors in the target want at least £1.6bn. “This is not a deal we need to do at any price,” Coupe said.
His comments came as the grocery group revealed a slightly better-than-expected performance over the Christmas season, with like-for-like sales edging 0.4 per cent lower in the 15 weeks to 9 January.
Its smaller rival Morrisons reported a 0.2 per cent increase in festive sales earlier this week.
But Sainsbury’s was the only one of the big four players, also including Asda and Tesco, to gain market share over Christmas, according to data from Kantar Worldpanel on Tuesday.
Sainsbury’s latest sales performance was a marked improvement on the 1.1 per cent sales drop in the previous three months.
The group has until 2 February to make a firm offer for Home Retail or walk away under the City Takeover Panel’s deadline.
Sainsbury’s said while it would likely shut up to half of Argos stores, which have shop leases with less than five years to run, there would be an increase in the number of overall sites as it outlined aims to roll out concessions nationwide.
There are already ten 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.