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LONDON, July 4 (Reuters) - British supermarket Sainsbury's pulled the plug on Netto stores, its 16-strong,two-year experiment designed as a plan to stop losing marketshare to the country's fast-growing discount sector led by Aldiand Lidl.
Sainsbury's set up a joint venture with Dansk Supermarkedgroup to bring Netto to Britain in June 2014, but the pair saidon Monday that they were ending the project, with Sainsbury'sdeciding the trial did not merit the further investment needed.
The retailer, Britain's no.2 supermarket behind Tesco said it would instead focus on its acquisition of HomeRetail Group, the owner of Argos, a deal which willsignificantly expand its non-food business.
"We have made the difficult decision not to pursue the(Netto) opportunity further and instead focus on our corebusiness and on the opportunities we will have following ourproposed acquisition of Home Retail Group," Sainsbury's ChiefExecutive Mike Coupe said in a statement.
Sainsbury's said in June it was prepared for an escalationof price wars in Britain's highly competitive supermarket sectorafter reporting a decline in underlying quarterly sales.
Like Britain's other traditional supermarket chains,Sainsbury's profits have been squeezed by the fast growth ofGermany's Aldi and Lidl, putting it under pressure to cutprices.
The Netto stores will close during August, Sainsbury's said,adding that it would write down to zero its 20 million pound ($27 million) investment in the trial and expected to incur winddown costs of 10 million pounds.
Sainsbury's said that it made the decision to quit Nettobased on trading data, customer insights and expansion costs,and that Netto would need to grow at pace and scale in order tobe successful in the long-term. ($1 = 0.7532 pounds) (Reporting by Sarah Young, editing by David Evans)
