Sales melt away at Iceland

RETAILER Big Food Group, which owns the Iceland chain of stores, has reported a slump in sales as Christmas trading proved disappointing. Management blamed a slowdown on the High Street and tough competition from 'convenience' stores.

The group, which is set to be bought by a consortium led by Iceland's Baugur, reported that sales in the third quarter were down 3.4% on a year earlier.

Big Food, which also owns the Booker cash and carry business, said sales during the key five-week Christmas trading period to end December fell 3.5%.

'Following the seasonal difficulties experienced during the second quarter, the company had expected some recovery after the summer,' it said in a trading statement.

'However, a generally disappointing Christmas on the High Street compounded by a trading environment increasingly characterised by grocery price deflation and increased competition in the convenience sector, meant that this did not materialise,' it added.

High Street giants such as Sainsbury and Tesco have embarked on an aggressive strategy of opening local convenience stores in recent years.

Same-store sales at the Iceland chain fell 3.5% in the third quarter, with Christmas sales down 3.1%. At Booker, sales were down 4.3% in the third quarter, with Christmas sales down 4.6%.

The group last month agreed to a cash takeover worth £326m by the Baugur-led consortium.

Shares in the firm closed at 94¼p on Thursday, shy of the 95p price offered by Baugur. They were unchanged in early trading today.

Seymour Pierce repeated its 'hold' advice on the stock. The broker said that despite the poor overall figures, sales for the final three weeks of the festive season had improved. Analysts argued the figures should give Baugur 'a bit more confidence'.