In a similar fashion to Sainsbury‘s this morning, sales and profits at privately owned grocer Iceland have been affected by competition from the cheap and cheerful discounters Aldi and Lidl.
The frozen goods specialist said that earnings in the year to March 27 were down 25% at £150.2m on sales of £2.69bn, down 0.5% on the previous year.
Chairman and CEO Malcolm Walker cited said the company was forced to respond to more than one issue related to new product innovation and the launch of a new Food Warehouse store concept.
“This has been an exceptionally challenging year for the group, and for the UK food retailing industry as a whole,” Walker said in a company statement. “In the face of food price deflation, intense competition and significant change in consumers‘ shopping habits, Iceland has continued its long tradition of successful reinvention.
We have done this by developing a new store format, launching new product ranges, upgrading packaging, rethinking marketing and initiating a major productivity programme. The benefits began to become evident in a more encouraging underlying sales and profit performance towards the end of the year, which has put us in a stronger position to face the continuing competitive challenges in the year ahead.”
The supermarket chain attributed a 4% fall in like-for-like sales to a “reduction in customer transactions, food price deflation and the cannibalisation effect of new store openings.”
The retailer is expecting to open up to 20 new Iceland stores in the UK and the Republic of Ireland this financial year, focusing on the UK to secure suitable new sites for the expansion of The Food Warehouse (generally double the size of a typical Iceland store).