Malcolm Walker's failed attempt to convert Iceland to organic produce has left his successor facing a £20m bill. Chief executive Bill Grimsey said: "We now fully understand the cost of unravelling the contracts entered into in an attempt to buy 40% of the world's organic vegetables. "In addition to those costs we will also take a hit on gross margins for the next three years. This shows what happens if you leap into something without researching it properly first." Grimsey also said the team looking at synergies resulting from the Booker takeover had identified savings of £20m for the year 2001/2002. When this was annualised it could rise to £30m. He suggested there might be greater savings in subsequent years, but said it was too early to quantify them and would not be drawn on whether the £50m annual savings, predicted when Iceland took over Booker last year, was achieveable. Iceland's like for like sales for the three months to March 31 were forecast to be down 3.7%, but Grimsey said the situation was improving He said: "February was awful, with the bad publicity and increased activity from competitors which was clearly targeting us. But their activity was not sustainable and sales have recovered in March, and we've got promotions lined up to lead in Easter." He said he would be looking for flat like for like figures for the next 12 months while the recovery plan was put into operation. Grimsey also had to issue another profits warning for the 15 month period to March 31. In January he had forecast pre-tax figures of not more than £62m, but he now expected it would not exceed £40m. Referring to the departure of all the old management of the company between November and January, Grimsey said: "The recent problems have nothing to do with the new management team. So far I've simply been the messenger, but from now on I'm very much responsible." {{NEWS }}

Topics