Iceland sells 28 stores to M&S but plans expansion

Jan 18 2006 By David Jones Daily Post Business Staff

DEESIDE-BASED frozen food retailer Iceland yesterday sold 28 stores to Marks & Spencer in a £38m deal on the same day it revealed a rise in Christmas sales.

The deal leaves Iceland with 675 stores but the company added it was planning to open a further 60 outlets across the UK.

M&S will convert the 28 former Iceland stores in England, Scotland and Northern Ireland - including one in Ormskirk - to Simply Food shops.

Stores being acquired in the transaction, which is due to be completed in March, also include Durham and Edinburgh.

Iceland chief executive Malcolm Walker said: "This was a really outstanding offer which we felt that it was our duty to our shareholders to accept."

He added that next month Iceland would embark on a new phase of expansion with plans for up to 60 new stores across the UK, including new sites in all the towns where stores are being sold to M & S.

Mr Walker added that a sharp revival in its trading performance meant it would still achieve sales "substantially higher" than those generated from the 749 stores it had a year ago.

Yesterday he also revealed same-store sales soared by almost a sixth in December. He said the performance of the UK's seventh largest foodseller had been based on simplifying the business and refocusing on its traditional strengths in frozen food.

It has also closed non-core operations, including its home shopping operation and 46 stores - including nine which had been converted to Iceland's complementary Cooltrader format.

"This recovery is now so well on track that we have become the fastest-growing food retailer in the UK in terms of like-for-like sales," claimed Mr Walker.

"The scale of the turnaround we have achieved may be judged by comparing our recent performance with the condition of the business when we took it over from The Big Food Group in February.

"It had then suffered four successive years of declining like-for-like sales and diminishing market share."

Same-store sales climbed 16.1% last month while for the quarter to December they were up 14.8% and total sales rose by 9.3%.

Iceland was founded by Mr Walker in 1970 but he resigned from the company in 2001. The group, renamed Big Food Group, was taken private in a takeover by the Baugur-led consortium in 2005 and split into its constituent parts, with Mr Walker returning to lead Iceland.

M&S said management and sales staff currently working at the Iceland stores would be transferred.

business@dailypost.co.uk