Iceland Foods is back in the black and enjoying “leading” market share growth after a year of cost-cutting.
Executive director Richard Walker last week declared that the frozen grocer was enjoying its “best ever financial health”, following an update to bond holders. Accounts published at Companies House this week shed more detail on those claims.
Turnover grew 6.5% to £4.1bn, up from £3.86bn in the year to 29 March. Adjusted EBITDA, which Iceland counts as key measure of performance, grew 42.6% to £150.9m.
Pre-tax profits were £15.6m, a reverse of a £16.2m loss last year.
“Investments in our customer proposition during Q3 delivered industry-leading volume sales growth in Q4, establishing a momentum which continues into with strong like-for-like sales progress in FY25 to data,” Iceland said in the accounts.
“We were able to offset the substantial inflationary pressures on the business through extensive cost-saving initiatives across our stores, digital operation and end to end supply chain.”
In 2023, Iceland slashed its marketing budget as it battled with surging energy costs, which increased substantially following Russia’s full-scale invasion of Ukraine in 2022. The move saw it ditch its Christmas advert that year. Walker said the time that funds would be reinvested into lowering prices for customers exposed to the cost of living crisis.
It also worked to renegotiate relationships with key food and energy suppliers and made significant progress on a “capital light” readjustment of its store estate. It’s seen Iceland add more lines into shops, as well as upgrade to more energy-efficient freezers across “three quarters” of its store estate. Its total estate fell by 29 stores, to 968.
One-off costs were £12.6m, which were largely associated with the cost of carrying empty leases after closing unprofitable stores.
Iceland added over 1,000 new own-label products during the year, most into its £1 or Less value range, which was the key driver of sales growth. It also included the addition of 25 new exclusive brand partnerships, with the likes of Peperami.
Iceland added a further 750 ambient SKUs as part of efforts to widen its appeal across chambers, and also invested heavily into its chilled snacking ranges.
The period also saw significant progress to upgrade its supply chain. In April, Iceland opened its 500,000 sq ft distribution centre in Warrington. When the site is fully operational in 2025, it will service 350 Iceland and Food Warehouse stores. Iceland also completed a “full backend rewrite” of its online delivery service.
The improved outlook was enough for Moody’s to upgrade Iceland’s credit rating from a B3 back up to a B2. The agency had initially downgraded Iceland in August 2022, amid concern that its rampant energy costs could affect its ability to pay its £800m bond debts.
Aiming to capitalise on the growth, Iceland restarted its marketing push, launching a new primetime TV campaign fronted by Josie Gibson in April.
It’s also on the hunt for new stores, with The Grocer revealing in July that it was aiming to double the number of Food Warehouse stores as part of a renewed rollout.
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