Iceland fails to stop sales slump

TROUBLED retail food chain Iceland will reveal details tomorrow of a further fall in sales at its 750 outlets.

The retailer - part of Big Food group, which also includes Booker cash-and-carry - will announce that underlying sales dropped by about 1.6% in the 13 weeks to 2 July, according to insiders.

BFG said originally that its trading update would be published last Friday, then moved the date to tomorrow.

It will now coincide with Marks & Spencer's crucial update from chief executive Stuart Rose and Sainsbury's annual meeting at which the board will be challenged over its handling of a pay-off for ousted chairman Sir Peter Davis.

Fears about the trading update last week sent shares in BFG to a 12-month low. A recovery to 89p valued the firm at £306m. And doubts about growth strategy increased recently when BFG pulled put of the bidding for convenience store group Londis.

The most recent information about Iceland's performance came at the end of May. At that stage, like-for-like sales were running 1.9% behind their level of a year earlier and more than 6% behind the internal targets BFG had set for Iceland.

The fall was checked in June as Iceland ran a successful sales promotion linked to the Euro 2004 football championship in Portugal. But the first quarter of BFG's financial year will still show Iceland running 1.6% down.

Meanwhile, latest accounts show that BFG directors took big pay cuts last year. Chief executive Bill Grimsey took home £738,000, down from £836,000 the previous year, while finance chief Bill Hoskins got £441,000, against £526,000 in 2003. No bonuses were awarded because targets for operating profit were not met, the annual report states.

Nevertheless, Grimsey was also awarded £600,000 of free shares and Hoskins got £360,000 under a long-term incentive scheme. The shares cannot be cashed before May, 2006.