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.
As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”
- 1 Mother fed her daughter tapeworms to make her skinny for beauty pageant
- 2 Crystal Palace next manager latest: Palace consider Ally McCoist - EXCLUSIVE
- 3 Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
- 4 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
- 5 Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'
'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
West poised to join forces with Assad in face of Islamic State
Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – as hunt begins for killer
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Bin bag full of cats' heads discovered near Manchester's Curry Mile
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
iJobs Money & Business
£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...
£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst - (Active Di...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...
£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...