Confirmed: Iceland supermarkets in Czechia file for bankruptcy

It is time to say goodbye to international food products at affordable prices — the Czech branch of the British supermarket chain Iceland has filed for bankruptcy. The chain was heavily impacted by the Covid pandemic and Brexit. The insolvency filing by the company ICL Czech, which operates the Czech branch, follows the news that the chain was closing its Czech stores.

Much of the Czech branch's stock was imported from the United Kingdom, and the cost of importing the items increased dramatically due to the UK leaving European Union at the start of 2020.

The chain started to close its Czech stores in April and also closed its e-shop, which it launched at the end of 2020. The chain’s website does not mention the closings or insolvency but does confirm that the e-shop has closed. The last posted weekly sales flyer is from the start of April. The last update to the history section on the website mentions the e-shop launch in 2020.

The chain’s name refers to its sale of frozen foods, but it also carries a full range of foods and healthcare items.

“The result [of Brexit] was a significant increase in the cost of transport of goods and other costs of services related to customs clearance of goods,” ICL Czech stated in the insolvency filing.

Delays in deliveries due to Brexit also added to costs, as the frozen items require special handling during shipping.

The retailer’s fortunes were also negatively impacted by the Covid pandemic, which hit much of the food retail sector.

Inflation was also part of the cause of insolvency. "Last but not least, it is necessary to mention the huge increase in the price of electricity, which has a significant impact on the operation of energy-intensive stores of the petitioner specializing in (selling) frozen foods," ICL Czech's filing stated,

According to the insolvency filing, Iceland has 135 creditors in the Czech Republic with maturing claims for payment exceeding CZK 38 million as well as liabilities of CZK 36 million to Československá obchodní banka (ČSOB), the Czech Social Security Administration, and the Prague municipal tax office.

The filing says that six of the 11 Czech branches have closed, and the remaining ones are “no longer able to generate sufficient revenue for further operation.”

Iceland has 82 employees in the Czech Republic and 19 people working by agreement, according to the filing.

According to Iceland’s website, it opened its first Czech store in Plzeň in 2011. The chain started in the UK in 1970 when Malcolm Walker opened a shop selling frozen foods in the town of Oswestry. The chain began to expand internationally in 1996 by opening stores in Ireland. Currently, it also has stores in Spain, Portugal, Malta, Norway, and Iceland.