"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."