Elaine Watson
Big Food Group boss Bill Grimsey brushed off dismal second quarter trading figures from Iceland with an upbeat progress report from Booker and reassurances that reformatted Iceland stores were delivering strong returns.
While like-for-like sales at Iceland were down 7.7% in the 13 weeks to September 27, Woodward Foodservice had seen double digit growth and Booker's underlying sales were up 0.9%, with 3.2% growth in non tobacco sales.
Sales at Iceland were weak, admitted Grimsey, but margins had been re-established.
"We have restored margins without any further impact on our top line.
"As we reposition Iceland through the new format programme, we can roll out our value based pricing proposition."
Although Iceland was clearly only going to be able to phase in an EDLP based proposition as the new store formats were rolled out, a sizeable proportion of the estate would be reformatted in a couple of years, he explained.
"We will have 30 by the end of the [financial] year and at least another 100 each year after that."
Like-for-like sales at the original four new format stores were achieving sales uplifts averaging 14.7%.
The first hi-tech Booker delivery hub was now up and running at Wolverhampton, enabling delivered customers to place orders online, added Grimsey (see page 8).
Trials of a new drop shipment service have also begun in the north east, with six manufacturers and a group of Premier retailers who receive deliveries direct from suppliers, but pay Booker via a central invoicing system.
However, investors were not impressed and Big Food Group shares sunk to an all time low of 25.5p.
Analysts said they were not clear how Big Food Group had managed to restore margins, although this was obviously good news. "They claim to have stabilised gross margins," said one analyst. "I haven't had a satisfactory explanation of how they have done it, though."
He added: "We know the recovery is not going to happen overnight, but the new management has been in there for a long time, and the City is getting impatient.
"The new format stores look good, but for the vast majority of the estate, they are sitting on a promotional strategy that delivers no progress on profits, just to maintain some sales momentum."
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Big Food Group boss Bill Grimsey brushed off dismal second quarter trading figures from Iceland with an upbeat progress report from Booker and reassurances that reformatted Iceland stores were delivering strong returns.
While like-for-like sales at Iceland were down 7.7% in the 13 weeks to September 27, Woodward Foodservice had seen double digit growth and Booker's underlying sales were up 0.9%, with 3.2% growth in non tobacco sales.
Sales at Iceland were weak, admitted Grimsey, but margins had been re-established.
"We have restored margins without any further impact on our top line.
"As we reposition Iceland through the new format programme, we can roll out our value based pricing proposition."
Although Iceland was clearly only going to be able to phase in an EDLP based proposition as the new store formats were rolled out, a sizeable proportion of the estate would be reformatted in a couple of years, he explained.
"We will have 30 by the end of the [financial] year and at least another 100 each year after that."
Like-for-like sales at the original four new format stores were achieving sales uplifts averaging 14.7%.
The first hi-tech Booker delivery hub was now up and running at Wolverhampton, enabling delivered customers to place orders online, added Grimsey (see page 8).
Trials of a new drop shipment service have also begun in the north east, with six manufacturers and a group of Premier retailers who receive deliveries direct from suppliers, but pay Booker via a central invoicing system.
However, investors were not impressed and Big Food Group shares sunk to an all time low of 25.5p.
Analysts said they were not clear how Big Food Group had managed to restore margins, although this was obviously good news. "They claim to have stabilised gross margins," said one analyst. "I haven't had a satisfactory explanation of how they have done it, though."
He added: "We know the recovery is not going to happen overnight, but the new management has been in there for a long time, and the City is getting impatient.
"The new format stores look good, but for the vast majority of the estate, they are sitting on a promotional strategy that delivers no progress on profits, just to maintain some sales momentum."
{{NEWS }}
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