Fresh from his ascent of Everest, Iceland executive chairman Richard Walker is fired up for a very different kind of frozen challenge
After 12 hours of continuous climbing, on a bitterly cold, late-May morning, Richard Walker and the veteran mountaineer Kenton Cool were the first to summit Mount Everest in their group.
But as Walker was soon to discover, the ascent was the easy bit. A queue of 20 other climbers had formed behind, in single file, clinging to the single rope on the narrow, icy ledge to the top. And for an hour, Walker was stuck in “a high-altitude traffic jam”. Petrified.
The water in his drinking bottle had already frozen as they reached the summit, after the coldest May in living memory saw temperatures plummet to almost –50°C. And as he lay down, exhausted, next to a dead body perfectly preserved from a climb in 2021, he started to go blind, suffering from retinal haemorrhage that caused Walker to lose 60% of his vision.
“I still had another eight hours of descent ahead of me, with no water, and I just lay there, next to a dead body, utterly terrified”
“I was utterly terrified, the wheels came off, emotionally, I was scared, and losing a lot of energy. I still had another seven or eight hours of descent ahead – with no water and no vision.” And it didn’t help that Cool – who had climbed Everest a record 17 times – “was in a bigger mess, and starting to shake”.
The delays and his poor vision meant Walker and Cool had to spend a second night at Camp 4, still in the so-called death zone above 8,000m, and in the middle of it, ran out of oxygen. But thankfully of course, Walker lived to tell the tale.
The next morning his sight had returned, and just three weeks after setting off, Iceland’s executive chairman was back at Iceland’s Deeside HQ – to a standing ovation – having raised another £1m for the Iceland Food Charitable Foundation (IFCF), which is building the world’s first Rare Dementia Support Centre as it continues its research into Alzheimer’s. But “it was too soon”, Walker admits. Even as an experienced climber, he had underestimated the physical and mental challenge, and it’s had a lasting impact in another way too.
“I had an epiphany on Everest: to value what you have. We are an amazing organisation, full of amazing people. I climbed to the top of the world in search of something new and I didn’t find anything. What I realised was: everything I’ve got, my job, my career, the platform I have, the people I work with, is perfect. If anything it gave me a resolve to lean into the business even more. To use it as a platform and to do more good things in the communities we serve.”
Walker: why I climbed Everest
When the first attempts on Everest were taken, it was “because it’s there”, as the doomed mountaineer George Mallory said before the 1922 expedition.
These days, hundreds of paying customers a year risk life and limb to follow in the footsteps of those intrepid pioneers. And for Walker climbing Everest was partly a case of unfinished business, tempted back after reaching 7,000m with his father, Iceland founder Malcolm Walker, in an earlier fundraise in aid of research into Alzheimer’s after his mother contracted early-onset dementia.
Walker admits “a lot of people are there for their ego, and of course, that’s a big part of it, there’s nothing like standing on the roof of the world looking down.”
But Everest “just inspires and captures the imagination and you can raise a shit-tonne of money. If I didn’t have that charity element I wouldn’t have done it. And when I had to dig deep it was the fundraising bit that kept me going, knowing how much of a difference it would make.”
Punching above its weight
Walker is right to be grateful. With £4bn of sales, Iceland is holding its own against far bigger rivals, thanks to the continued rollout of its Food Warehouse stores, online and now courier-based expansion, as well as a reinvigorated programme of NPD, featuring exclusive brand tie-ups, and its own unique brand of folksy and disruptive marketing. In fact, apart from the discounters, it’s the only major multiple to have grown its grocery share in the past decade, which now stands at 2.3% [Kantar, 12 w/e 4 May].
Some say Iceland is doing too well. That it’s just another supermarket profiteering from high food price inflation. And a recent note to bondholders forecasting the highest EBITDA in over a decade for the next year to 31 March 2024, appeared to support that narrative.
Walker scoffs at the idea. Iceland’s accounts for 2022/23 show EBITDA fell £20m to £120m. And that was despite strong sales, and £70m of cost savings to offset a £96m increase in its energy bills.
“Profit-wise we won’t make a profit. So we’re certainly not profiteering. We’ve not taken a dividend in over 10 years. But we don’t talk about profit. We talk about EBITDA, which is cash. From EBITDA of £120m, we generated only £12m cash after capex and servicing our debt, which is 0.3% of our £4bn sales.”
At one stage Iceland even had to contend with trade credit insurers pulling cover, amid concerns it would be unable to finance its £550m of debt when the current deal expires in 2025.
“Last summer, the way wholesale prices were and the fact we were unhedged, to be honest, it was looking quite interesting,” he admits. But as well as energy costs now falling, it’s fixed its energy costs, as well as reducing energy use through swapping out ‘open-end’ freezers and retrofitting doors on chillers.
As to the refinancing: “We have long dated maturity on our bonds. We’re supremely confident of refinancing when the time comes and, very prudently, have a plan ABCD and a lot of different options now.”
Deflation
Iceland is also working hard to help shoppers in the cost of living crisis, though. That’s included the Iceland Food Club’s interest-free microloans scheme, which won a Gold Lion at this year’s Cannes Festival. And this week, Iceland introduced a 20% reduction on 500 lines – a £26m investment – to complement the earlier ‘mix and match’ mechanic, a giant ‘meal deal’ on 1,000 lines.
“There’s nothing else like it in the market. It’s not multibuys where we force on you three of the same thing that you didn’t really want. The idea is you’re in control and can genuinely feed your family for £10.”
In January, Iceland also extended a freeze on its value frozen food range for another year, to keep the price of more than 600 items from its £1 or Less range as close to or below £1 as possible. Around 20% of Iceland’s range is now covered, and Iceland now “lose money on those core staples”, Walker adds.
“We used to make about 20% margin on those £1 lines. Now we’re negative margin, but that’s our response to the cost of living crisis and our response to the government’s price cap idea. We were a step ahead of the government there.” And with inflation passing its peak “the moment cost price is reduced for us, we tend to pass it on, because otherwise customers will shop elsewhere”.
All in all then, Walker has returned from his Everest quest with Iceland in good shape. Even the closure of its Swift convenience stores, in favour of the Local format, is for Walker part and parcel of the lifecycle of ideas that an entrepreneurial enterprise like Iceland entertains.
Online is even making money, Walker insists, having grown massively, with half its sales same-day delivery thanks to tie-ups with Deliveroo and Just Eat.
So the last thing Walker needs, surely, is to enter the lion’s den that is British politics. That’s still his stated aim, though; he’s on the list. And while he knows “I’m opening myself up for a lot of shit”, especially when his Iceland role offers “a great platform without public accountability and scrutiny”, it’s also a calling. “What interests me is not the money,” he laughs. “It’s the desire to make a difference. I’ve seen that from our business. I know my values and my principles.”
So if he were selected, and the Tories were to win, it’s inconceivable that Walker would want to just be a backbench MP. And his role at Iceland would need to change. But “there’s about 10 ifs,” he adds. “The reality is: there is nothing to say. Let’s see what happens.”
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