Iceland has revealed that it is planning to open 50 more stores in its current financial year, a similar rate of expansion to the discounters Aldi and Lidl. However, the frozen food specialist’s ambitious expansion plan was announced alongside disappointing full-year results that were impacted by the challenging trading conditions and higher costs.
On comparable 52-week basis to 29 March 2019, the group’s total sales rose 4.5% to £3.08bn, bolstered by the opening of a net 43 new stores during year and 30 the previous period. Unlike past years, Iceland did not reveal like-for-like sales figures, although it stated its growth was ahead of the wider UK grocery market.
Excluding exceptional items, the group’s EBITDA fell 8.7% to £140.1m. Iceland said that the reduction occurred entirely in the first half of the year due to weak sales performance, higher staff and distribution costs, and investment in pricing.
Much of its expansion last year came via its The Food Warehouse fascia, with 31 openings. Iceland ended the period with 942 UK stores (including 90 The Food Warehouse outlets). The group also completed 30 major refits and begun selling its products in value-orientated chain The Range. An initial trial in three The Range stores in the Midlands and North West was said to achieved “encouraging results”, and Iceland’s food is now on sale in a total of 13 outlets.
Meanwhile, its international business saw the opening of five new stores in the Republic of Ireland (taking the total to 26) and one in the Czech Republic (taking the total to seven).
The group ended the year with a total estate of 975 stores. Since the beginning of its current financial year, Iceland has already opened 14 new stores in the UK (7 Iceland, 7 The Food Warehouse). Despite facing a tough retail climate, the group is hoping to open a total of 50 new outlets this year, including 34 The Food Warehouse stores.
“Within an intensely competitive UK marketplace, adversely affected by consumer uncertainty and the well-known pressures of changing shopping habits on the high street, we have continued to focus on investing for the future,” said Tarsem Dhaliwal, Iceland’s Group Chief Executive.
This included: “Expanding our store footprint, enhancing the appeal of our existing stores, growing our award-winning Online business, continuing to roll out new and exciting food lines that are unique to Iceland, developing our supply chain to support the growth of our retail estate, and finding new channels to sell our food through The Range in the UK and a growing global franchise and export business.
“Our sustainability initiatives over the last year have substantially raised public awareness of Iceland and enhanced respect for our brand and its values, and we are confident that this can only enhance our prospects in the longer term.”
NAM Implications:
- Why quit when on a roll…(and difficult to stop retail developments in the short term)
- UK environment and business model perfectly suited…
- …and ability to skip like-for-like performance indicates pretty secure funding.
- Suppliers might well benefit from a focus on The Food Warehouse.
- Meanwhile, matching Iceland priorities provide a pointer: “Expanding our store footprint, enhancing the appeal of our existing stores, growing our award-winning Online business, continuing to roll out new and exciting food lines that are unique to Iceland, developing our supply chain to support the growth of our retail estate, and finding new channels to sell our food through The Range in the UK and a growing global franchise and export business”.
