Up to 160 jobs are at risk in Dublin and Donegal after the owners of the Iceland supermarket chain decided to shut down the seven frozen food stores in its Irish unit, which had losses of about €1 million in the most recent financial year.
The group has six outlets in Dublin - at Thomas Street, Finglas, Raheny, Ballyfermot, Talbot Street and the Navan Road - and one in Letterkenny, Co Donegal.These stores will close within the next fortnight after their remaining stocks are sold off.
Icelandic investment firm Baugur, which acquired the chain last February, is seeking to find a buyer for the Irish stores. A spokeswoman said that the staff would remain on the payroll in the short term, with a view to transferring to a new owner in the event of a sale.
"That would be the preferred option," she said.
While the most recent accounts for Iceland Food (Ireland) show that its net profit tripled to €1.52 million in the 53 weeks to April 2nd, 2004, the spokeswoman said the performance of the Irish unit had deteriorated badly in the period since then.
She also said the figures for the Irish operation did not fully reflect the costs attributable to the business, which were charged to its British unit, which has some 700 stores.
While the accounts to April last year show that sales fell to €25.32 million from €25.96 million in the previous year, the spokeswoman said "sales declined by 20 per cent in the two years to the end of April 2005". The losses in the most recent year were in the region of €1 million, she said.
"Our operation in the Republic of Ireland is losing money and we can see no prospect of that changing. We cannot afford to sustain those losses any longer and have reluctantly decided we have no alternative other than to cease trading," the company said in a statement.
"We are trying to find a purchaser for the whole or part of the business there and are looking at all options to secure the continuing employment for our staff in the Republic of Ireland."
Baugur took over Iceland when it acquired the Big Food chain, whose operations also comprised a distribution operation and a cash and carry business.
The spokeswoman said the poor condition of the Iceland business generally meant that no additional money would be available the company to renew the Irish business.
"Following the takeover of Iceland Frozen Foods in February, the business was found to be in a very poor state financially and also losing a substantial amount of money," the statement said.
"We have reviewed all areas of the business and made many changes to both improve efficiency and cut costs. Staff redundancies were inevitable as we closed our home shopping operation and also reduced the size of our head office.
"These were painful decisions to make but we had no choice if we are to return the company to profitability."
The lobby group for small retailers, RGDATA, claimed the Iceland closure was a direct result of high operating cost and "intense competition" in the retail sector.
"Repealing the Groceries Order would be one sure way of ensuring that this is the first of many closure announcements and job losses in the retail grocery sector over the years ahead," said RGDATA director general Tara Buckley.
