Iceland - comment

Iceland’s Q1 results were broadly in line with expectations, particularly given the guidance provided with the recent financial year 2025 results. A slightly weaker gross profit margin had been anticipated; however, the margin was relatively flat, declining by just 20 basis points. This was supported by sales growth and some cost efficiencies, which offset inflationary pressures, including increased national insurance contributions.

Iceland continues to invest in its estate, with capital expenditure rising due to new store openings and the refurbishment of existing locations. Leverage remains unchanged at 3.8x on a pre-IFRS 16 basis.

The key takeaway from both the financial year 2025 and Q1 results calls is the renewed (cautious) confidence from management. This is reflected in the capex plans outlined, with ongoing focus on new store openings. Encouragingly, data from recent store refurbishments indicate notable uplifts in sales performance.