Iceland is set to reveal a decline in underlying sales over the festive period after its controversial Christmas advert failed to boost business.
A report prepared for bondholders, obtained by the Financial Times, showed underlying sales fell by one per cent in the 16 weeks to 4 January.
The sales slip reflects the growing challenges faced by retailers, as increased competition and weak consumer confidence took their toll over the crucial Christmas trading period.
Despite this, a string of new store openings helped boost Iceland’s total sales by 3.5 per cent, according to the report.
The discount supermarket caused a stir in the run-up to Christmas after its festive advert was banned from TV.
The campaign, which promoted the company’s decision to scrap palm oil from its products, was blocked by regulator Clearcast for breaching rules on political advertising.
“Whilst our advert sadly never made it to TV screens, we are hopeful that consumers will take to social media to view the film, which raises awareness of an important global issue,” said managing director Richard Walker following the decision.
But Iceland was forced to remove its name from some of its own-brand labels after realising it could not afford to scrap palm oil entirely before the end of the year.
Iceland has been contacted for comment.