Iceland in the red as Rachel Reeves’ tax raid forces prices higher
Iceland has warned it is being forced to increases prices because of Chancellor Rachel Reeves’ tax raids as the supermarket chain fell into the red.
The Flintshire-headquartered said that while it is “doing our utmost” to offset increasing costs arising from last year’s Autumn Budget, it will “inevitably have to pass some of these on to consumers”.
The chain added that as a result, it expect UK food price inflation to peak at some four to five per cent in the next six months.
Iceland also said that it is currently working to “fully offset the substantial cost increases we incurred at the beginning of the new financial year” as a result of the rises in employers’ National Insurance contributions and the National Living Wage.
The comments have been included in new accounts filed with Companies House for the firm’s financial year to 28 March, 2025.
The results show Iceland fell to a pre-tax loss of £900,000 in the 12 months, having posting a pre-tax profit of £15.6m in the prior year.
Its profit before interest and tax declined from £87.1m to £76.6m while its turnover increased from £4.10bn to £4.11bn.
During the year, a net 13 Iceland stores were closed and 14 The Food Warehouse locations were opened.
The company added that it is planing to open 20 new stores during its current financial year, mainly under The Food Warehouse brand.
According to Kantar data, Iceland’s market share remained at 2.2 per cent in the financial year.
In the year, the average number of people Iceland employed rose from 26,352 to 26,830.
Iceland reviews cyber security after M&S and Co-op attacks
A statement signed off by the board said: “Iceland Foods’ sales growth has continued in the year to date, with Easter seeing us repeat our success of Halloween 2024 with market-leading growth across our seasonal ranges.
“We are doing our utmost to offset the growing input cost pressures caused by suppliers seeking to recover the increase in their own labour costs arising from last autumn’s Budget, but will inevitably have to pass some of these on to consumers, where we can do so without weakening our own price position in the marketplace.
“In consequence, we expect UK food price inflation to peak at some four to five per cent in the next six months.
“Work is in hand to fully offset the substantial cost increases we incurred at the beginning of the new financial year as a result of the rises in employers’ National Insurance contributions and the National Living Wage, with the aim of maintaining EBITDA [earnings before interest, taxes, depreciation and amortisation] over the year as a whole.
“However, this cost recovery will be progressive and the timing of the increases means that we do anticipate some dilution of EBITDA in Q1.
“We have a plan to recover this shortfall before the end of FY26.”
Iceland also confirmed it has “throughly assessed” its cyber security framework in the aftermath of recent attacks on retailers such as M&S and the Co-op.
Iceland was founded in 1970 by Sir Malcolm Walker and Peter Hinchcliffe and is owned by the Walker and Dhaliwal families.
The accounts for Iceland’s parent company, which includes a wider range of businesses, have not yet been filed with Companies House.
Morrisons cuts thousands of jobs as it returns to profit
The results for Iceland come after rival Morrisons cut more than 3,600 jobs as it returned to profit for the first time since a private equity-backed takeover in 2021.
The Bradford-headquartered supermarket giant posted a pre-tax profit of £2.1bn for the 12 months to 27 October, 2024.
The profit came after Morrisons made a pre-tax loss of £919m in the prior 12 months and £1.3bn in the year before that.
However, the supermarket chain reduced its headcount from 104,819 to 101,144 during its latest financial year.
The latest job losses came after Morrisons shed more than 8,800 roles in the year before.
The chain’s revenue also declined in the year from £18.3bn to £17bn.
Morrisons was bought by US private equity investor Clayton Dubilier & Rice (CD&R) in October 2021.