Malcolm Walker, the cheeky chappy of retail, has got Woolworths into a right pick and mix in the past week.
News of the Iceland boss's approach sent the high-street general store's shares up nearly 25 per cent and put pressure on its chairman, Richard North, to reconsider his rejection of Walker's bid.
It's not the first time that the "inspired maverick" Walker has made an opportunistic strike at a retailer in trouble. In the 1980s he secured Iceland's old rival Bejam, and in more recent years he has fired off attempts to buy Bhs and Littlewoods. No one can dispute Walker's steely determination or deny his eye for a bargain.
North is likely to have a battle on his hands as he tries to free the group of its ailing retail chain without being lumbered with debts and difficult leases. As one retail insider says: "Malcolm is a witty, nice guy, but he is also aggressive. You're always conscious that he hasn't got to where he's got to without being a bit hard nosed."
To some, Walker's ambition to take on Woolworths, a chain that has been written off by most City pundits, is evidence of underlying madness. But as Tony Shiret, an analyst at Credit Suisse, points out: "Bearing in mind that everyone has said frozen foods is a dead channel for 20 years, Malcolm has done pretty well out of it. I definitely wouldn't write him off in anything he chose to do."
Walker himself has dismissed the views of the Square Mile on retail. "They don't understand what it's like in the high street," he once said. "All they know is Knightsbridge and how solicitors' wives like to shop."
A return to Woolworths would be a particularly poignant moment for Walker, who was fired by the firm nearly 40 years ago when it was discovered he was moonlighting from his deputy manager's job to set up a certain frozen foods store.
The high-street generalist, then one of Britain's biggest retailers, had hired Walker straight from school to its management trainee scheme. He started in the stock room, aged 17, sweeping floors after securing four O-levels on his fourth attempt. He had previously tried out at Woolworths' rivals Marks & Spencer and John Lewis but failed all their entry tests because he struggled with the arithmetic. Still, he managed to make the Woolworths cut, no doubt helped by an early view of the retail world courtesy of his dad, who ran a village grocery shop. The former colliery electrician died of cancer when his son was 15.
Walker hated his time at Woolworths, working six-day weeks and being switched to branches around the country overnight. By 1970 he had reached the dizzy heights of deputy manager at the Wrexham store and was looking for a way out. At just 24, he put £30 of savings into opening a frozen food store in Oswestry, Shropshire, alongside a Woolworths colleague, Peter Hinchcliffe.
The pair bought big sacks of frozen vegetables and sold them loose in polythene bags at half the price of pre-packed goods. It was a risky business at a time when most people didn't have a freezer, but they took £90 on their first day's trading and soon worked out that it could be a more lucrative occupation than the hard grind at Woolworths.
In any case, Woolworths' management quickly realised that Walker and Hinchcliffe had second jobs on the side, after which Walker was forced to rely on his entrepreneurial skills. Fortunately, these had been honed while he was still at school, where he would organise dances and concerts in the local church hall.
Under Walker's enthusiastic guidance, Iceland expanded rapidly, and by 1984, when it floated on the London stock market, it had 84 stores. Five years later it trebled in size again by taking over its rival Bejam after a fiercely contested bid battle.
Over nearly 30 years the chain saw almost unhindered sales and profits growth, but things began to go awry when Walker merged Iceland with the cash and carry retailer Booker in 2000. He announced plans to step back from the business and allow Booker's then chief executive, Stuart Rose, to take the reins. It seemed a perfect retirement plan, and Walker was outraged when Rose jumped ship for his dream job at Arcadia just six months later.
It was already a difficult time, as Iceland had just taken a controversial decision to switch all its own-label frozen vegetables to organic. The move played to Walker's personal interests as a member of Greenpeace and was an attempt to build on the sales success that followed Iceland's decision to become one of the first stores to remove artificial flavours and colourings from its own-label foods and ban GM ingredients. But the organic move, which it was promised would not lead to price rises for shoppers, was way ahead of its time, and the cost to the company was enormous. Problems were compounded by the launch of an online store which, like many others at the time, found profits to be elusive.
Before the real cost of the new plans had been realised, Walker hired Bill Grimsey, the retail boss well known in the industry for orchestrating a dramatic turnaround at the DIY chain Wickes. Within weeks, Walker had left the firm he founded and was under investigation by the Financial Services Authority.
He has now been cleared of any wrongdoing but spent three and a half years in the wilderness as the FSA, Department of Trade and Industry and Serious Fraud Office investigated his sale of nearly £13.5m of shares just over a month before the new Iceland boss Grimsey announced a massive profits warning.
There's no doubt that the share-dealing scandal left its mark on Walker, who swore never to return to the stock market again. However, he was offered a chance for redemption when Grimsey's attempts to turn around Iceland and Booker, now jointly known as Big Food Group, ran into trouble.
Baugur, the Icelandic investment firm, had built a stake in Big Food Group and took it private for £326m in 2005. It brought in Walker to take over at Iceland as it split off Booker into a separate company.
Since then, profits at Iceland have more than tripled to £130m and sales have risen despite the divestment of nearly 100 stores. As one retail insider who has known Walker for years says: "He has a shrewd understanding of the British buying public and he knows how to give them a bargain."
As a result of the sales success, Baugur and Walker have been able to refinance Iceland twice, taking out more than £330m to cover their initial investment and enjoy a tasty return on top.
But for comeback king Walker, the main pay-off has been in gaining renewed respect in the business community and the chance to point out the failings of Iceland's previous bosses, which are displayed in detailed charts and figures posted on the group's website. Still, he is now clearly ready for another challenge. If he and Baugur win Woolworths, it is likely that Iceland's managing director, Andrew Pritchard, and finance director, Tarsem Dhaliwal, will be left running the frozen foods chain while Walker takes on the pick and mix.
Sources say he does not plan to introduce frozen foods to Woolworths or link the groups more closely. The main attraction is that Woolworths is in a similar position to Iceland when Walker returned there three and a half years ago. Somehow it has become rather unloved, with even its core categories underperforming. He is likely to focus it more strongly on the best-performing areas, ensure that the products it sells suit the seasons more effectively, and cut out some categories such as expensive technology. He is unlikely to close a large number of stores but is almost certain to cut costs and prices.
As Shiret of Credit Suisse says: "There is a mythical view that Woolworths has been doing as well as it can in a difficult market but it is clear things could be done better."
Unsurprisingly for a serial risk-taker, Walker is taking a big gamble, but if he gets the terms he wants from North, there's a chance he'll be able to pick a big profit from the Woolworths mix.Reuse content