Big Food Group today showed a return to headline-grabbing promotions had helped improve sales at its struggling Iceland supermarket chain.

Chief executive Bill Grimsey said there had been a "significant change" in Iceland's performance over the last three months.

Like-for-like sales were down 3.6 per cent on a year ago in the 13 weeks to December 27, compared with a 7.7 per cent drop in the previous quarter.

And over a five week period covering Christmas and New Year, like-for-like sales at the frozen food chain were down just 2.1 per cent.

Mr Grimsey said margins had been maintained at "robust" levels despite the renewed emphasis on promotions.

He said: "We were able to bring the public better value and make money at the same time."

Big Food has been battling to revive Iceland's fortunes after a dismal 2002 in which it continued to lose market share to its larger rivals.

A decision to scrap promotions offering buy-one-get-one-free deals in favour of a longer term low-pricing policy put off shoppers.

The group went back on its decision and in the run-up to Christmas launched a TV campaign advertising promotions on more than 100 items.

It said the "progressive development" of its marketing had paid off and added the performance of new format Iceland stores was also encouraging.

The group is trialling stores stocking greater amounts of fresh food and the early results showed the sales uplift was "substantial".

Mr Grimsey said: "This quarter has seen a significant change in Iceland sales performance and good progress with the new format store programme.

"We are pleased with the margins being achieved and the momentum across the business."

Big Food added, however, a slump at its cash and carry chain Booker had pushed group like-for-like sales down by 2.9 per cent in the 13 weeks to December 27.

Sales at the cash and carry division were down 2.8 per cent in the quarter and by 3.5 per cent in the five weeks to January 3.