Sales hit £3bn at Iceland but supply chain issues blamed for slip in profits
Deeside-based food retailer Iceland has posted an 8% rise in sales to £3bn but reported a dip in profits which it attributed to price cuts and supply chain issues.
For the 53 weeks to the end of March, the company posted adjusted EBITDA excluding exceptional items of £157.1m, down 1.8% from £160m the year before, which is said was down to price cuts, extra marketing investment and supply chain problems.
“Investment in marketing and price, together with problems in our supply chain infrastructure during December caused poor overall availability in our key Christmas weeks, and inadequate supplies of some of our best-selling seasonal lines,” Iceland said.
Like-for-like sales were up 2.3% in the period while Iceland expanded its Food Warehouse chain to 59 stores through 23 new openings.
The retailer reactivated its Deeside depot, which it said will complete this year creating 240 jobs.
The depot will initially be used to warehouse and distribute chilled food and grocery lines for stores in the North West, Northern Ireland and in its international business.
“The depot is operating smoothly, providing additional capacity to support our established multi-temperature regional distribution centres at Livingston, Warrington, Enfield and Swindon,” the group said.
Iceland Group managing director Tarsem Dhaliwal said: “This year we have continued to take a long term view and to invest for the future: expanding our store footprint, enhancing the appeal of our existing stores through a major programme of refurbishments, growing our award-winning online business, continuing to roll out new and exciting food lines that are unique to Iceland, and developing our supply chain to support the growth of our retail estate.”
Iceland also pointed to external issues such as Brexit and the proposed Sainsbury’s and Asda.
“We believe that we must focus on running our own business rather than allowing ourselves to be diverted by external issues over which we can exert no control, whether those be Brexit or the proposed merger of Sainsbury’s and Asda.”
The retailer said clarity on the nature and timing of Brexit would be “helpful to us as to every other business in the UK” bit said it was confident of its ability to trade successfully through any likely future scenario.
“Consolidation among the Big Four food retailers seems unlikely to add materially to the intense competitive pressure under which we already operate, and any store sales forced by the competition authorities may create additional useful opportunities for property acquisitions,” Iceland added.
