Iceland Food rules out deal with Amazon as Food Warehouse attracts new customers

 
Alys Key
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Iceland is modernising stores and expanding its Food Warehouse business (Source: Adcro)

Iceland's boss has ruled out a deal with Amazon, telling City A.M. that "we don't want anything to do with them".


The retailer reported steady sales growth this morning, as it eyes expansion into sites left vacant by the recent wave of store closures and grows its online business.

But managing director Tarsem Dhaliwal said it would not turn to a Morrisons-style tie-up with Amazon as one avenue for growth.

"We hate Amazon," he said. "They'll bully us and do horrible things to us. They'll use us, we don't want anything to do with them."

The figures

Sales for the 53 weeks to the end of March were up eight per cent at just over £3bn.


Like-for-like sales growth was 2.3 per cent, a slight improvement on last year's rate of two per cent.

But adjusted earnings before tax, interest, depreciation and amortisation (EBITDA) were down slightly at £157.1m.

Why it's interesting

Amazon has made several aggressive moves into the UK's grocery sector, including a tie-up with Morrisons and even an attempt to buy Waitrose.

But Dhaliwal insisted Iceland would not get into bed with the tech giant.

Instead Iceland is focussing on expanding its rapidly-growing Food Warehouse brand, a larger out-of-town store format. By the end of the period, the retailer had added 23 new sites to bring the chain to a total of 59. Another 30 are planned for this year.

Iceland said today that although it expected some of these openings to cannibalise sales at nearby Iceland stores, the Food Warehouse brand was attracting customers who would not normally shop in Iceland. Dhaliwal added that no town centre stores will close unless they are unprofitable and at the end of their leases, which only applies to "half a dozen" sites.

Stores left vacant by the likes of Mothercare and Carpetright could offer opportunities for Iceland to push ahead with this expansion. "We look at all opportunities," Dhaliwal told City A.M. "Obviously what's happening with all these CVAs and organisations struggling there could be opportunities."

As for the rest of the estate, Iceland is busy refitting its stores and adapting to the modern retail environment by growing its online business. The group has even agreed a partnership with JD.com to sell some Iceland groceries in China.

What Iceland said

Managing director Tarsem Dhaliwal said: "This year we have continued to take a long term view and to invest for the future: expanding our store footprint, enhancing the appeal of our existing stores through a major programme of refurbishments, growing our award-winning online business, continuing to roll out new and exciting food lines that are unique to Iceland, and developing our supply chain to support the growth of our retail estate."