J Sainsbury Plc agreed to sell its struggling Argos general merchandise unit to Swift Partners, a new company backed by retailers including former Co-op boss Richard Pennycook.

The deal values Argos at at least £120 million, marking a significant divestment for the UK supermarket chain. Sainsbury's acquired Argos in 2016 for £1.4 billion, but the general merchandise division has faced mounting challenges from online competitors and changing consumer habits.

Swift Partners, the acquiring entity, brings together retail veterans including Richard Pennycook, who previously led the Co-operative Group. The consortium aims to reposition Argos as a standalone omnichannel retailer, leveraging its established brand recognition and extensive store network across the UK.

The transaction is expected to complete in the coming months, subject to regulatory approval. Sainsbury's will retain its core grocery and financial services operations, focusing investment on its supermarket estate and digital grocery capabilities.