The Investment Column: Iceland makes a cool comeback

IF THERE was an Oscar for unlikely retail comeback of the year then Malcolm Walker's Iceland would surely win it. This time last year the company announced a buy-back of a third of its shares to boost is flagging share price after its first dip in profits for 26 years. By July the shares had dipped to a five year low of 77p and by September the board had controversially re-negotiated their share option prices (downwards obviously).

And now look what's happened. Iceland surprised everyone yesterday with sales sharply boosted by the introduction of home delivery. The shares followed suit rising 10 per cent to 197.5p as analysts rushed to upgrade.

Same-store sales are up by a thumping 16 per cent in current trading though this is against a very weak comparison the previous year. It is expecting the figure to drop to a still respectable mid-single figure over the year.

All this should not detract from Mr Walker's entrepreneurial achievement. If there is a criticism now it is that the company is trying to do too much. Gearing is high but should fall to less than 70 per cent in two years. Assuming current year profits of pounds 60m the shares trade on a measly forward p/e of less than 10. A 50 per cent discount to the market looks cheap.