Iceland stores rocked by sales slump

SALES at the Iceland food retail chain fell sharply over Easter, internal figures show.

Its parent company, Big Food Group, said last week that the chain's 750 stores had suffered a modest decline of 0.2% in underlying sales in the 14 weeks to April 2.

But confidential information obtained by Financial Mail reveals that the position has since taken a sharp turn for the worse. In the week to Easter Saturday, Iceland's overall sales were down by 2.6% on Easter week in 2003.

Chief executive Bill Grimsey insisted last week that Big Food Group, which includes the Booker cash-and-carry operation and Woodwards Foodservice as well as Iceland, has improved its margins.

So profits for the financial year should be in line with analysts' expectations of £50 million.

This is despite some aggressive price-cutting. Iceland's latest deal offers eight items for £5 compared with more than £12 if they were sold at the normal price.

Grimsey is pinning his hopes for Iceland's revival on shifting the emphasis of the outlets away from frozen food and towards a convenience-store format. The company is aiming to convert six stores a week.

In last week's statement, Grimsey warned that 'the market place itself continues to experience greater competitiveness together with pressures on selling prices and costs. These factors are expected to intensify in the year ahead'.