Iceland plays it cool by looking to the long term for best results

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FROZEN food chain Iceland unveiled record profits yesterday, three months after Yorkshire entrepreneur Malcolm Walker led a £1.55bn deal to buy back the business he founded more than 40 years ago.

The group’s profits rose 18.5 per cent to £184.3m for the year to March 30 after like-for-like sales rose six per cent in a “highly competitive” marketplace.

However, Mr Walker said underlying sales had been “pretty flat” since the year end, as supermarkets stepped up their promotions by offering money off vouchers to attract shoppers in recent months.

It’s Iceland’s seventh set of record results in a row since Mr Walker returned to the business he founded in 1970.

Mr Walker said this performance was achieved “not by chasing short-term profit targets, but by resolutely doing the right things for our staff and customers for the longer term”.

Iceland said the launch of 230 products under its own brand provided a boost for sales during the year, while it also opened another 21 stores – 16 under the Iceland fascia and five under Cooltrader.

It now has 814 stores across the UK and employs 24,000 staff.

Mr Walker and other senior managers own 43 per cent of the business after joining forces with other investors, including DFS sofa chain founder Lord Kirkham.

They bought the business from creditors to Icelandic bank Landsbanki, the collapsed bank that took control of the chain in 2008.

It represented a remarkable comeback for Mr Walker, who lost his job at the company in 2001 but was brought back in 2005 to revive its fortunes.

Sales have grown every year since his return, with trade booming since the economic downturn. Sales of frozen food have grown because consumers consider it to be good value for money.

Mr Walker said yesterday: “Our strategic priorities remain unchanged. The key benchmarks for Iceland will not be short term performance but satisfying our customers by continuing to offer great value, maintaining the quality of our products, keeping up the pace of innovation and providing great service by well rewarded and highly motivated colleagues.

“We will also make our products available to more customers through continued expansion of our store network, and by exploring opportunities for further development of our offer overseas, with the help of our new investors.”

Mr Walker highlighted the fact that, in the most recent survey, 93 per cent of the company’s staff said they enjoyed their work.

Results of mystery shopper surveys also revealed that the quality of the stores and customer service had improved, year on year, Mr Walker added.

Mr Walker said Iceland was the “principal driver of innovation” in the UK frozen food market.

Both Mr Walker and Lord Kirkham have built up business empires from humble origins.

Mr Walker was born in Grange Moor near Dewsbury in 1946 and lived there until he was 18 when he left home to become a trainee manager at Woolworths.

He subsequently toured Yorkshire working for Woolworths at stores in Huddersfield, Heckmondwike, Leeds and Scarborough.

He founded Iceland in 1970 with a single small shop in Shropshire selling loose frozen food.

Lord Kirkham, the adopted son of a miner, founded DFS in a former billiard hall in Doncaster 40 years ago.

He went on to float the business in 1993 before taking it private in 2004 for £507m.

Lord Kirkham sold DFS to a private equity firm in 2010, adding £300m to his already substantial wealth.

Since then, he has invested in retail parks and farms in Yorkshire. Earlier this year, he joined forces with Mr Walker to help him take control of Iceland.

At the time, Lord Kirkham said he would not be a passive investor in the business.

He told the Yorkshire Post: “Malcolm Walker has been a friend for 35 years. We’ve learnt a lot from each other and have a good deal in common. We value people a great deal.”