Elaine Watson
Continued growth at refurbished stores combined with weak comparatives are expected to push Iceland back into positive like-for-like sales territory in the second quarter.
In a first quarter trading update, Iceland's like-for-like sales were down by 0.2%, significantly behind Tesco and Asda, but moving in the right direction, said Schroder Salomon Smith Barney analyst James Anstead. "The figures are about the same as Safeway's and not far off what we are expecting from Sainsbury in a few weeks. The sales uplifts at refitted stores [averaging 13.2%] are also encouraging."
To date, 62 stores have been refitted, with refurbs now running at about three a week.
The mini high street format with newspapers, fresh food and sandwiches, and the core-plus' format, with an enhanced chilled and ambient offer, had proved the most successful.
Big Food Group CEO Bill Grimsey said he was pleased with the "continuous improvement" in top line growth at Iceland, and while depressed tobacco sales had driven like-for-like sales at Booker down to ­1.2%, the new Spend and Save initiative rewarding higher volume customer purchases with retrospective discounts had helped stem the decline.
"At Booker the big focus now is on category business planning with key suppliers after our success on soft drinks, where we rationalised ranges and saw significant sales uplifts," he said.
BFG's foodservice subsidiary Woodward, though still not profitable, was growing fast, posting like-for-like sales up 18% in the quarter, said Grimsey.
Woodward had just opened its second ambient distribution centre in a Booker depot in Birmingham, and would open up similar facilities where there was spare capacity at Booker sites across the country, he said.
Numis Securities analyst Mark Hughes retained his add' valuation on the stock, which stayed put at 88p following the statement: "There is still some value in BFG from a breakup valuation point of view."
Baird analyst Paul Smiddy said Iceland was still struggling to define its role in the market, while the online shopping operation and appliance businesses remained in the red.
According to TNS data for the 12 weeks to June 22, Iceland's market share has stablised at 2.3% ­ the same as the previous quarter. However, compared to the same period last year, its share slipped slightly from 2.4% to 2.3%.

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