Stockmarket surprised as Iceland sales rocket ahead
THE STOCKMARKET was taken by surprise after Iceland, the frozen foods retailer, unveiled underlying sales roared ahead by 16.1 per cent in December.
Likefor-like sales from its 703 stores rose 14.8 per cent over the last trading quarter. Iceland is run by Malcolm Walker and is owned by Icelandic company Baugur and Icelandic bank, Kaupthing. Iceland was formerly part of the Big Food Group which was taken over by the Vikings a year ago. At that time, Iceland's sales were falling by 10 per cent annually. Walker has slashed product lines by 30 per cent.
...Sells 28 stores to Marks & Spencer
Iceland has sold 28 leasehold stores to Marks & Spencer for £38 million. The stores are to be rebranded under M&S's Simply Food badge. The stores are located in mainly well to do areas such as Biggin Hill, Cirencester, Tewkesbury and St. Neots. Food was M&S biggest growth area with a rise of nearly 8 per cent over the vital Christmas trading period.
The purchase from Iceland brings the number of Simply Food stores to 171. Seymour Pierce, the broker, reckons the new stores will boost 2007 pre-tax profits by £5 million. The trial involving Simply Food stores on BP garage forecourts could lead to the establishment of 300 such stores on BP forecourts throughout the UK if customer demand proves strong enough.
Northern issues profit warning as energy bill soars
Northern Foods, the chilled food and pizza maker, posted a profit warning to cool down a 10 per cent rise in its share price. Investors snapped up the shares as Northern's biggest customer, M&S, reported robust Christmas trading, particularly of food.
Northern Foods alerted the market that its annual earnings will probably be less than last year's £62.2 million. It said the reasons behind the result were a 60 per cent increase in energy prices, which translated into an extra £6 million in costs; Christmas promotions at discounted prices, which eroded profit margins; and supermarkets seeking to negotiate better terms from their suppliers as they embark on a price war to gain market share.
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