The Investment Column: Iceland needs new direction
Hence last year's failed bid to buy the Littlewoods stores, which indicated a lack of confidence in the existing business.
Chief executive Malcolm Walker confirmed those suspicions yesterday when he hinted that although no acquisitions are on the horizon he would still like to do a deal.
The problem is that the market doesn't believe there is any real upside here. The shares trade on a heavily discounted price/earnings ratio of 10 but there is still no interest. If the share price does drift up from its current 155p to around 170p they are likely to be hit by heavy selling.
All this is hard on the management, which is doing all the right things but running to stand still.
The dismal 3.5 per cent fall in like- for-like sales in the first nine weeks of the second half has been reversed and comparative sales have risen by 2 per cent in the 17 weeks since January. Margins have also improved.
Iceland is also reining back its store opening programme and will now open 40 new stores during the year. This compares with a recent annual average of 50.
Last year's results were decent in a difficult market. Pre-tax profits in the year to December were 3.4 per cent higher at pounds 72.6m. Sales were flat at pounds 1.4bn.
With pounds 34m net cash, a share buy back is possible but this is unlikely to excite the market. Analysts have trimmed their profit forecasts for the current year to around pounds 76m.
With sluggish earnings growth prospects and price competition in the supermarket sector set to put more pressure on margins, the shares have few attractions.
- 4 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 5 Women think Irish men are the sexiest, survey finds
Italian police 'reveal' what Jesus looked like as a young boy
Mysterious 'X-Files' sounds heard miles above the Earth
Florida couple forced to register as sex offenders for having sex on public beach
Who should I vote for in the general election? Take The Independent's interactive quiz to find out which party is the right choice for you
General election: Conservatives mocked online over Boris Johnson's claim of SNP 'jockalypse'
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...