Big Food in bond battle with City

The Big Food Group, the retailer that owns Iceland, is heading into a row with the City following its surprise profit warning last week.

Bondholders invested £150m in the company only six weeks ago but were unaware that at the time a change in promotions strategy at Iceland was failing and the company was heading for a slump in sales.

On Thursday, Big Food announced that sales at Iceland had fallen 8 per cent during the previous three weeks. It said the division would go into a loss for the first half. It had released a statement just 15 days before which had better sales figures for the previous period, and did not refer to a loss. Following a conference call with bondholders on Thursday, where management was faced with "hostile" questions, some listeners were under the impression that the company had started looking into a problem in May.

However, a spokesman said the impression was incorrect and it was only after the bonds were issued in mid-June that there was any indication there was a problem with profit margins. He added the company had made trading statements as soon as it received the relevant information.

"The timing of events is at least unfortunate," said one analyst. "There is no doubt that they should have known sooner."