Iceland boss says year was 'exceptionally challenging' as profits plunge

• EBITDA fell by 25.7% on the back of falling sales and investment
• Sales drop driven by falling transactions and deflation
• Iceland has invested in prices, marketing and its online offering

The grocer’s adjusted EBITDA fell 25.7% to £150.2m for the year ending March 27 as like-for-likes during the period declined 4.4%.

Iceland has attributed its struggles to falling customer transactions, food price deflation and sales cannibalisation caused by new store openings.

Iceland chairman and chief executive Malcolm Walker said: “This has been an exceptionally challenging year for the group, and for the UK food retailing industry as a whole.

“In the face of food price deflation, intense competition and significant change in consumers’ shopping habits, Iceland has continued its long tradition of successful reinvention.”

Iceland said that alongside its sales dip, its falling earnings was a result of investing in price cuts, marketing campaigns and the rollout of its online business and international expansion.

Walker said: “The benefits began to become evident in a more encouraging underlying sales and profit performance towards the end of the year, which has put us in a stronger position to face the continuing competitive challenges in the year ahead.”

During the period Iceland opened 30 new stores in the UK, including six larger stores under it’s the Food Warehouse fascia, and three new stores in the Republic of Ireland.

After five closures of stores there was a net addition of 28 stores. Despite the new store openings total sales at Iceland dipped by 0.5% to £2.7bn.

Iceland said it is making 200,000 deliveries per week following the launch of its online proposition, while in the first half of the year it reduced prices on 800 core frozen food lines from £1 to 89p.

Iceland added: “It has become increasingly clear that concentrating on price alone no longer provides an effective point of difference in an intensely competitive and price-focused market place.

“We have therefore changed our approach to re-emphasise the quality of our products, the uniqueness of Iceland’s innovation and the special advantages of frozen food.”