UK: Iceland's Grimsey blames predecessors for financial disaster
"Surprised and shocked" by the lack of internal controls and misjudged management decisions he found at Iceland upon his appointment as CEO five weeks ago, Bill Grimsey reported the second profits warning in a week yesterday (31 January). It could take two years to undo the damage wrecked by his predecessors in the past six months with the Booker merger and the organics policy, he added.
Pre-tax profits for the 15 months ending March are "significantly below expectations and not likely to exceed £62m," Grimsey revealed, partly because hefty unexpected costs totalling £34m are taking a huge chunk away from the £135m predicted by analysts until last week. Post tax profits may not even top £12m, battered by poor sales following a disastrous organics only campaign in store and increased costs.
The dramatic resignation of chairman and Iceland founder Malcolm Walker amid a share sale scandal has somewhat stolen the headlines, but Grimsey's announcement has now forced investors to think seriously about the frozen food retailer. Stock value has plummeted since Walker's timely tender of four million shares in early December, and yesterday they hit their lowest level for three years, at 149p.
Indeed, if Walker had sold his stock during the meeting, he would have pocketed about £6m less than the £13.5 he did last month.
The origins of Iceland's predicament, according to Grimsey, can be laid at the door of Stuart Rose. Having co-engineered the Booker merger, Rose promised first year savings of £20m for the merger group, but then quit in November to join Arcadia. Yesterday however, Grimsey announced that he would have to go back to square one on the merger details, as synergy saving would actually only climb to £8m. Rose has responded maintaining that when he left there was "no suggestion" targets would be missed.
Another board member under Grimsey's fire yesterday was managing director Andrew Pritchard. His role as finance director until this January made him directly responsible for internal controls, on which Grimsey has now "initiated a complete review."
Pritchard also announced his resignation yesterday, and is expected to claim compensation for his departure.
The city was shocked by the revelation of the extent of Iceland's troubles, but no one as much as Grimsey: "I thought I was going to be running a £6bn turnover company. I'd get my hand on the tiller and start to redirect it. But instead I've got a capsized boat. I've got to leap into the water and sort it out."
In a slow growth industry where innovation is paramount, mainstream food producers are increasingly drawn to the lucrative organic sector. The rewards are enticing, but the path to profit can be paved...
With 6,294 exhibitors and 161,000 visitors from 160 countries, Anuga is one of the most important shows for the food industry. As well as showcasing the latest conventional food products, Anuga 2005 a...
Sales of organic baby food have risen dramatically in recent years. In order to compete, conventional baby food brands are having to innovate - something that can be difficult in a market made up of p...
As the larger food companies continue to expand both domestically and internationally through acquisitions, their brand portfolios become larger and more widespread. While some choose to advertise the...
Earlier this summer, Singapore paid host to Natural Products - Organic Asia 2005. Despite the show's title, there was less emphasis on organic principles, and a greater focus on health foods, such as...
As organic food continues to move into the mainstream, a wealth of companies, from the family-run to the multinational, are taking advantage of this popularity, with new products and line extensions. ...
The organic market appears to be going from strength to strength, especially if this year's BioFach exhibition is anything to go by. With over 2,000 exhibitors from 70 countries and more than 30,000 v...
Organics Aotearoa New Zealand (OANZ), the trade body representing the organic sector, will receive NZ$1.5m (US$930,630) in government funding over the next three years, Economic Development Minister T...
- Why personalisation will take-off in US food
- US food next wave on display at Winter Fancy Food
- Column: Kraft Heinz, Unilever and sustainability
- Comment: Meal kits in US - don't believe the hype
- General Mills sales woes continue - analysis
- Unilever 'lining up spreads sale'
- UK own-label firm Park Cakes sold in MBO
- Immigration crackdown "risk" for US dairy industry
- BRF plant suspended amid bribery allegations
- Brazil giants JBS, BRF probed over alleged bribery