Iceland profits soar 15% as buyers circle business

For the year to March 25, Iceland increased EBITDA 2% to £187.9m, and sales jumped 5.9% to £2.39bn.

Iceland – which is currently being circled by potential suitors after collapsed Landsbanki’s 67% stake was put up for sale – reported like-for-like sales for the year up 2.1%. The performance marks the sixth consecutive year of growth since founder Malcolm Walker returned to the helm of the 800-store business.

Walker told Retail Week the frozen food retailer’s product offer, store standards, customer numbers and staff morale have all been “transformed” over the period “creating a highly profitable and cash-generative business that ended the year virtually free of debt”.

He claimed Iceland “is the main driver of innovation in the UK frozen food market” and launched more than 200 new products in the year. He added that despite intense competition in the market “we know we’re doing the right things as our existing customers are spending more money with us”.

Walker and his management team own 23% of the business and he said his first choice regarding the sale of Landsbanki’s stake is to buy back Iceland. He said he does not need funding from a private equity firm to do the deal, but that it is “early days” in the process.

Asda and Morrisons are both interested in buying Iceland, but Walker has the right to match any offer made.

It emerged earlier this week that Asda had appointed Lazard to advise on the merits of making a bid for Iceland, while Morrisons is also understood to be running a slide rule over the business.

Asda chief executive Andy Clarke has experience of the Iceland business from running the chain as managing director under Bill Grimsey. However, sales fell off a cliff under Grimsey and he, along with Clarke, exited when Walker was parachuted back in.

Walker, who has just returned from climbing Everest to raise £1m for Alzheimer’s Research UK, said since the year end like-for-likes have been “brilliant” and “getting better”. He said he had “increased the pace of product innovation” and launched a new ad campaign featuring I’m a Celebrity winner Stacey Solomon.

During the year, Iceland opened 21 new stores. It plans to open a further 15 Iceland shops this year.