Mr Walker may still be keen to talk politics, but the decision to ditch an effort to become an MP has meant that he has more time to think about Iceland, the supermarket founded by his father, which he has helmed since 2018. “It’s allowed me to refocus on the business,” he said.
For the supermarket chain, it has not been an easy few years.
Since a leveraged buyout in 2012, Iceland has run with high levels of borrowing. In 2022, as it struggled with higher energy costs, credit rating agency Moody’s said its lower profits and therefore higher leverage risked making it tougher to refinance. It cut Iceland’s rating to B3, six levels below investment grade.
Analysts pointed to the precariousness of the grocer’s balance sheet, saying soaring energy costs and inflation put it at risk.
“I think we were unfairly treated by some credit rating agencies,” Mr Walker said.
He branded reports that hedge funds were circling by snapping up its debt at a steep discount as “bulls–t”, saying: “That’s what you get with hedge funds who have short positions, who are just trying to whip up a bit of panic.”
Iceland refinanced £475m of its £550m debt due in 2025 last year. Its leverage has come down to 4.2 times its underlying profit, from 5.6 times. Although this is still relatively high, Mr Walker does not seem concerned.
“I think debt is quite a healthy thing – although obviously it’s got to be manageable,” he said. Moody’s, meanwhile, issued a more upbeat report on Iceland earlier this year, saying its outlook was positive. It upgraded Iceland’s credit rating again.
“Now the rating agencies have a more positive outlook for us, that helps with credit insurers, which helps with buying terms, which helps with cash.”
Falling energy prices have also come as a boost. The supermarket chain last month told bondholders that its profits hit a record high in the year to March 29. During the year, sales jumped to £4.2bn from £3.9bn a year earlier.
Writing three weeks ago, Mr Walker said Iceland’s “financial health [was] the best it’s ever been”.
“The last two years have been challenging to say the least, with a maelstrom of inflationary cost pressures. But thanks to everyone’s brilliant efforts, Iceland has come through stronger and better,” he said on LinkedIn.
Mr Walker might be keen to shout about the stronger figures, but for some it has only sharpened long-running frustrations over the grocer.
After the pandemic, other supermarkets returned their business rates relief, but Iceland argued it “could not afford to”.
Mr Walker said he felt “totally vindicated” in his approach.
“We absolutely made the right decision for our colleagues and our business,” he said. “When the government offered more relief, we didn’t take it. But it wasn’t a loan. We didn’t have to pay it back, and actually, it was about shoring up business.”
Mr Walker insisted Iceland is now in a stronger position and ready for expansion. The group has plans to open 30 extra “food warehouse” shops every year. Designed as Iceland’s answer to Aldi and Lidl, these larger big box stores sell products in bulk and are opening in retail parks.
The company has more than 180 food warehouse stores at present, with the potential to “at least double that”, Mr Walker said.
“We had to slow down because of the energy challenges over the last year or two,” he said. “But now we’re more stabilised, we’re back up again. At the end of the day, all we want to do is open shops, create jobs and pay tax.”
Mr Walker says he is hopeful the new Government will make all of this easier.
“Labour correctly diagnosed the problem in terms of a chronic lack of growth,” he said. “And if they can free up things like the planning laws that will help business, but it will also help the worker.”
In his view, this answers the lingering question over whether Labour can be both the party of business and the party of workers. “Absolutely,” Mr Walker says. “Absolutely they can be both.”
For many, the proof will be in Labour’s upcoming worker rights overhaul.
“They’ve got to think through it carefully,” Mr Walker said.
“It’s absolutely right to give workers the best deal possible. It just needs to be managed and communicated the right way with business.”
