Iceland boss Malcolm Walker insists that it is still committed to sustaining growth, despite selling off 28 stores this week.
Walker said the £38m sale on a leasehold basis to Marks and Spencer, which plans to turn them into Simply Food outlets, was part of a wider programme.
In a wide-ranging interview with The Grocer, he revealed that the chain had sold off 46 stores since he returned as chief executive last February, including all shops in the Irish Republic.
Total store numbers have dropped from 749 a year ago to 675 at present. “We have no plans to reduce that number further,” said Walker. “The remaining stores will still take more money than the 749 did last year.”
He also said he intended to replace the stores sold to M&S. “We believe there are 60 towns that could benefit from an Iceland store and we’re sending out a request list to property agents, but we won’t be ready to make another announcement until late spring/early summer.”
Walker said a total of 600 head office staff had been
axed since he took over, after Iceland Foods was bought by private investors including Baugur and Kaupthing in December 2004.
“When I came back to the business, it had become hugely complicated. A whole layer of unnecessary bureaucracy had been introduced, so we slimmed down head office to 800 staff.”
The previous management came under fire from Walker as he spoke of reducing the four Iceland Foods formats to just one in the past year. “A total of 250 standard Iceland stores had been converted to a sort of c-store offering. We’ve converted 15 back so far, with the remaining 150 to revert back this year. The initial conversions cost £78m-80m and each shop will cost £50,000 to convert back. What a waste of money.”
Separately, Walker said Iceland had gone through rationalisation of product lines, with 30% delisted in 2005. Meanwhile, its advertising budget for 2005-2006 was cut by more than half.
But the Cooltrader chain, which he established in 2001 after he left Iceland, would be maintained. It was bought by Baugur and Kaupthing last February and is run alongside Iceland as a separate business.
He said Iceland’s like-for-like sales had grown 16.1% in December and that he was expecting good sales growth.
Rod Addy