Iceland, the UK frozen food retailer whose sales were recently buffeted by an ill-fated organics drive, is set to announce a “back to basics” strategy for sales reinvigoration on Wednesday, when it will also reveal its first financial results since a series of profit warnings earlier this year.
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Analysts expect the 15-month accounting period to the end of March to bring pre-tax profits of £40m (US$56m) before tax, goodwill amortisation and exceptional costs of £66m.
The company’s new management, headed by CEO Bill Grimsey, will be anxious to stress that Iceland has abandoned its organic foray, which had unsettled the company’s mainstay of customers, used as they were to simple cheap prices and special offers. The new strategy therefore is expected to involve a series of promotions of the kind Iceland is best known for.
Booker benefits?
Investors hope that Grimsey will provide some more details on how Iceland will be driving sales at the Booker food wholesaling business with which it merged in June last year. Grimsey has always stressed his attraction to Iceland is in part due to the opportunities offered by the merger with Booker, but analysts are stressing that it is vital for this business to drive top line growth.
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In May meanwhile, the Department of Trade & Industry (DTI) launched a full investigation into allegations of insider dealing in Iceland shares, an issue on which Grimsey is unlikely to reveal much. The probe follows on from an investigation by the Financial Services Authority into the controversial £13.5m share sale by founder and former chairman Malcolm Walker in mid-December, only weeks before the first profit warning was made public on 22 January.
Walker, who has always maintained that he did not know trading had been poor, resigned after hearing allegations that he had acted improperly through the share sale. It is thought that he has yet to be interviewed by the DTI inquiry.
