Iceland Foods, based in Deeside, has reported a return to profit following a substantial cost-cutting initiative.
The supermarket group saw an increase in turnover and a significant financial turnaround despite reducing its headcount and facing external economic pressures.
Financial Turnaround
Turnover for the year ending March 29, 2024, increased from £3.720bn to £4.118bn. The group registered a pre-tax profit of £15.6m, a significant shift from the previous year’s pre-tax loss of £16.2m.
This financial improvement marks a successful year for the supermarket group, demonstrating the effectiveness of their strategic measures.
Reducing Operational Costs
The group’s headcount fell from 27,447 to 26,352 due to the closure of unprofitable stores and consolidation of van delivery service stores. Despite the challenges, directors’ emoluments increased from £7.3m to £7.6m. The highest-paid director’s remuneration stayed at £3.8m.
Notably, no shareholders’ dividend was recommended reflecting the company’s cautious approach towards profit distribution amidst recovery.
Boosting Sales through Investments
Investments in customer propositions during Q3 fuelled industry-leading volume sales growth in Q4. This momentum has continued into FY25 with strong like-for-like sales.
The company was able to mitigate inflationary pressures through extensive cost-saving measures across stores, digital operations, and the supply chain.
The company faced rising energy costs following Russia’s invasion of Ukraine, leading to budget cuts in marketing, including the cancellation of its Christmas advert.
Store Closures and Product Expansion
Iceland’s total store count reduced by 29, bringing the total to 968 stores. This reduction was part of a broader strategy to close non-profitable locations.
The retailer introduced over 1,000 new own-label products during the year, with many added to its £1 or Less value range, driving significant sales growth.
In April, Iceland opened a 500,000 sq ft distribution centre in Warrington to enhance its supply chain. Once fully operational next year, it will serve 350 Iceland and Food Warehouse stores.
Commitment to Lowering Prices
Executive director Richard Walker highlighted the company’s dedication to reinvesting funds into lowering prices for customers impacted by the cost of living crisis.
Walker committed to focusing on price reductions rather than extensive marketing campaigns, aligning with the company’s strategy to provide value to its customers.
Future Outlook
Looking ahead, Iceland Foods is optimistic about sustaining its momentum in sales growth while navigating ongoing economic challenges.
The company anticipates further benefits from its strategic investments in the supply chain and customer-centric initiatives, positioning itself strongly in the competitive retail market.
Iceland Foods’ return to profit is a testament to its effective cost-cutting measures and strategic investments.
The company remains focused on sustaining growth and providing value to its customers amidst external economic pressures.