Iceland, the frozen food retailer, is back in the Irish market, almost four years after closing down its stores in the Republic and walking away due to mounting losses.

The chain has agreed a franchise deal with the Dublin-based cash and carry group AIM, under which its stores can get back in business. One Iceland outlet in the Dublin suburb of Ballyfermot has already been reopened by AIM and others are expected to follow later in the year.

Iceland had seven outlets in its Irish operation, six in Dublin and another in Letterkenny, County Donegal. In July 2005, it stunned the trade with the announcement that it was pulling out of the Republic, giving its 160 staff just 24 hours¹ notice of the closure, together with a promise to pay them until all stock had been cleared.

Explaining the decision at the time, a company spokesman said: “Our operation in the Irish Republic is losing money and we can see no prospect of that changing. We cannot afford to sustain the losses any longer and have reluctantly decided we have no alternative but to cease trading.”

The franchise arrangement is a new departure for Iceland, which has traditionally owned and operated all its outlets, and follows a number of approaches from Irish retailers in the wake of its pull-out from the Republic.

“If the business performs as well as we expect, then there is the prospect of other franchises opening in Ireland,” according to a spokesman for the group.

However, its current partner, AIM, has been given first option over the Iceland franchise in Ireland. The cash and carry company, based in the Dublin suburb of Clondalkin, has been operating since 1990 and has a staff of around 40. It had previously concentrated on the non-food sector, stocking household, gardening and electrical products.

Since quitting the Irish market, Iceland has prospered, with profits tripling over the past three years as it has closed other loss-making stores. In its latest results Iceland recorded a pre-tax profits of £34.7m on sales of £1.78bn for the year to March.