Big Food struggles in price war
BIG Food Group is stepping up its drive to convert Iceland into a convenience stores chain after suffering a worrying sales setback in the fierce supermarkets price war.
Like-for-like sales across the Iceland business slumped 1.7% in the 13 weeks to 2 July against the same period a year ago while underlying sales on a groupwide basis slipped 0.5%.
Big Food said 'the tougher trading environment noted in the company's statement on 27 May has continued'.
The bleak first-quarter trading update is yet another sign of how the smaller players in the supermarkets sector are struggling in the wake of Tesco and Asda's battle-for supremacy. Both chains fired another salvo of savage price cuts last week. Morrisons' recent acquisition of Safeway has added to the pricing pressure.
Big Food said: 'Recent industry data indicate that the level of competitiveness has increased in pace over recent months, particularly in the key area of price. The company expects the more competitive environment to continue for the foreseeable future.'
Today's grim outlook is likely to add yet more pressure to Big Food's shares, which have fallen more than 50% to 86p so far this year.
Chief executive Bill Grimsey is racing to refurbish the older Iceland frozen food stores into more modern convenience outlets selling vegetables, fruit and tobacco alongside its main product range.
Out of 748 shops in the Iceland estate, 185 are now trading in the new format, and this has led to sales increases. Grimsey also hopes to stem the sales decline by handing new Big Food managing director Andy Clarke responsibility for bringing more customers into Iceland.
Grimsey said: 'Against tougher market conditions, our priority is to accelerate our strategic initiatives, particularly the Iceland refit programme, the roll-out of Premier and our drive into the delivered food service market through Woodward.'
First-quarter sales at catering supplier Woodward rose 32.2% while sales at Premier, where Big Food supplies independent retailers, climbed 7%.
But like-for-like sales at cash-and-carry business Booker fell 1.1%, or 1.8% when tobacco sales were stripped out. The group said the Bank of England's recent interest rate rises would add £2m to its net interest costs this year.
