ICELAND said it was well placed to weather the current supermarket price war after a year in which its underlying sales held firm but profits dropped.
The frozen food retailer, which has 833 UK stores and employs 25,500 staff, saw earnings fall 11 per cent to £202.2m in the year to March 28 due to the cost of rolling out a new online service and expanding abroad.
Sales were up 2.7 per cent to £2.7bn and unchanged on a like-for-like basis after a year of intense competition as the four major supermarkets cut their prices in order to grapple with discount rivals Aldi and Lidl.
Discount retailers have become popular at a time when household incomes have been squeezed.
The business said the sector was undergoing a period of major change, but it outperformed the leading multiples through its range of products, good store locations and pricing strategy.
With its online investment, Iceland said it had a “strong and defensible platform in a potentially difficult trading environment in the year ahead.”
During the year the group opened 46 stores and rolled out a new online home delivery service to 280 stores. It also bought out its seven-store Irish franchise operation in readiness for a major expansion drive in the country. During the year Iceland launched frozen Hula Hoops and McCoys crisps as well as bagged ready meals for £2.
The business said this year it plans to open 40 new Iceland stores in the UK, creating up to 1,250 jobs, and complete the roll-out of its online service to the rest of its UK stores.
Malcolm Walker, Iceland’s chairman and chief executive, said: “This has been a year of major investment for Iceland both at home and overseas. Overseas we began to serve important new export markets in South Africa and the Middle East, acquired the formerly franchised Iceland stores in the Republic of Ireland and opened two additional stores in the Czech Republic.”
Commenting on outlook, the company said: “Iceland will continue to focus on satisfying our customers by offering great value, maintaining and improving the quality of our products, increasing the pace of innovation and providing great service.”