Hot weather lifts Iceland

Related tags Retailing Iceland

Like-for-like sales at Iceland improved in the second quarter of
the year, the first gain in many months for the struggling
retailer. But it remains to be seen how much of this was due to the
hot summer weather increasing volumes and whether the store revamp
programme is truly bearing fruit.

Iceland, the supermarket chain owned by the UK's Big Food Group​, has registered its first rise in sales for several quarters as a result of the hot weather this summer.

Second quarter sales were lifted by increased volumes of soft drinks, ice cream and barbecue products at both Iceland and the company's wholesale unit, Booker, helping to lift BFG's like-for-like sales by 2.2 per cent.

The performance at Iceland itself was particularly welcome, with the second quarter increase in like-for-like sales of 1.7 per cent coming after a decline of 0.2 per cent in the first quarter.

The sales growth was also driven by increasing emphasis on promotional activity and by a re-focusing of the Iceland business on its core frozen food operations, the company said.

The supermarket chain has struggled to compete with larger groups, despite the fact that many of its stores are in the prime town centre locations increasingly sought by the likes of Tesco and Sainsbury as restrictions on out-of-town developments tighten.

But a new store format is proving successful, with turnover substantially higher in the revamped outlets. A total of 28 stores were refurbished during the quarter, while two new outlets were opened, taking the total number of new format outlets to 92.

Iceland, which has a total of 760 stores, said that on average, three stores are being converted to the new format each week. A further 60 are due to be revamped during the second half alone.

Meanwhile, the Booker cash & carry business posted a1.8 per cent increase in like-for-like sales during the quarter, with advances for both its tobacco and non-tobacco divisions.

Booker is the UK's leading cash & carry wholesaler, serving independent retailers and caterers through 178 branches nationwide, but it has recently been expanding its Premier retail business as well - some 1,193 customers now operate under this fascia, exclusive to Booker, and BFG said that sales to this segment were well above the average consumer spend during the quarter.

BFG's other main unit, Woodward Foodservice, maintained its strong sales performance in the core frozen product sector during the quarter, while sales of ambient and chilled products were given further impetus by the opening of a second depot in Birmingham in July. Like-for-like sales at this unit were up by an impressive 20.7 per cent.

It is still early days for Iceland's recovery plan, and the positive growth in sales during the quarter may yet prove to be a flash in pan caused by the exceptional weather conditions.

But with UK consumers increasingly looking for opportunities to 'top-up' their weekly shopping at more convenient locations, Iceland is well place to benefit. The question is, can it grab a share of the market before it is edged out by the likes of Tesco and Sainsbury?

Related topics Market Trends

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