Iceland store

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Frozen food chain Iceland has put expansion plans on hold and warned of potential store closures as the cost of energy spirals.

Boss Richard Walker told The Mail on Sunday that the group’s latest energy bill ballooned by £20m, more than doubling the total.

The rising costs left the business “fighting to keep the lights on” given its reliance on chillers and freezers compared with other supermarkets.

Walker called for an energy price cap for British businesses as soaring bills threatened to push pubs, hotels, restaurants and retailers over the edge this winter.

“We’ve got to make decisions because we have got this unmanageable volatility,” Walker said.

“In some instances, it might just be easier to mothball shops or temporarily close them because the energy costs are just completely unsustainable.”

Walker, who took over running the chain from his father Malcolm Walker in 2018, warned Iceland was facing the prospect of a cliff edge in terms of costs as its energy only remained hedged for the next ten weeks.

“We are good at selling frozen peas,” he added. “We are not electricity traders.”

Last month, Iceland had its debt rating slashed by Moody’s on concerns over how inflation, energy costs and consumer spending would impact the group’s finances.

It followed newly filed accounts at Companies House revealing the supermarket also fell to a pre-tax loss of £4.1m last year.

Walker told The Observer over the weekend that he had contacted No 10 directly to ask for an immediate and radical cost of living package.

He said mooted plans by Tory leadership frontrunner Liz Truss to cut business rates for SMEs would not be good enough.

“This is absolutely urgent,” he added. “I’ll happily share our data and findings with [the business department] and with the Treasury. Let’s get a plan up and ready for whoever the next prime minister is, because it really is urgent. Where markets dislocate completely, like they have with the energy markets, it’s time for the government to step in, otherwise what are they for?

“My fear is that they’ll do a half-baked response. I read that Liz Truss is thinking of further rate relief for small businesses. That’s lovely, but it won’t even touch the sides. What they need to understand is [this affects] big business as well as small, because it’s exactly the same trouble we’re in – there’s just more jobs at stake.”

Morning update

Markets remain quiet this morning where fmcg is concerned.

The FTSE 100 slumped 0.7% to 7,228.34pts as trading opened today.

Early fallers include Marston’s, down 4.5% to 37.1p, Just Eat Takeaway, down 1.7% to 1,485p, and AG Barr, down 1.2% to 491.1p.

Naked Wines, PayPoint, Deliveroo and THG were among the risers, climbing 5.7% to 130p, 2.4% to 641.2p, 2.3% to 83.2p and 2% to 56.1p respectively.

This week in the City

With the summer holidays in the rearview mirror, newsflow looks set to pick up this week, with the Tory leadership contest finally drawing to a close.

Tomorrow kicks off with the latest retail sales figures from the BRC-KPMG monthly survey and Barclaycard’s latest spending data, while packaging firm DS Smith issues a trading update ahead of an AGM.

Prepared foods manufacturer Bakkavor posts its first-half results on Wednesday and there is a pre-close trading update from WH Smith.

Thursday is the CMA deadline for the watchdog’s decision on whether to launch a formal investigation into the Morrisons acquisition of collapsed McColl’s.

Personal care firm PZ Cussons rounds out the week with a trading update.