Bottom Line: Iceland is getting warmer

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The Independent Online
ICELAND Frozen Foods has come a long way since Malcolm Walker, its chairman and chief executive, opened his first shop in Oswestry, Shropshire, selling loose frozen peas and fish fingers. Twenty-three years later, Iceland is poised to open its 600th store. Annual sales have just hit pounds 1bn, and it is now the 180th largest UK company by market capitalisation.

The shops have long since shed their freezer-centre origins. They are now more like convenience stores, selling a wide range of fresh fruit and veg and chilled ready meals, hence yesterday's decision to axe 'Frozen Foods' from the company name. The move into Littlewoods food halls takes them even closer to their boast of being a mass-market version of Marks & Spencer with keener prices.

Pre-tax profits grew by 20 per cent to pounds 55.4m in the year to 2 January. Earnings per share grew 19 per cent and the final dividend of 6.9p makes a total of 10p, up 18 per cent. Stripping out the benefit of new stores, sales grew by 10 per cent, compared with about 1-3 per cent growth for grocers as a whole.

Capital investment of pounds 110m this year will add about 60 stand-alone shops and 48 food halls in Littlewoods, and pay for a new depot at Swindon. It will also create about 1,750 jobs.

Iceland brushes aside fears that as it expands, strains could appear in its management structure, distribution or systems.

The shares rose 9p to 744p yesterday. They now stand on a multiple of 17.3 times forecast earnings for this year of 42.9p (before the two-for-one scrip issue, also announced yesterday) and are worth the premium price.