LONDON, June 17 (Reuters) - British grocer Iceland plans a continued expansion this year by launching up to 40 new stores and completing a nationwide roll-out of its online service to help reverse declining earnings.
British consumers are buying little and often in local convenience stores and online, rather than stocking up in big weekly shops at bigger outlets in a bid to save money.
At the same time, discounters Aldi and Lidl and upmarket Waitrose and Marks & Spencer are taking market share from the middle ground, leading market leader Tesco and No.4 Morrisons to launch price cuts that analysts fear could squeeze industry profit margins.
Among the lower-end grocers, Iceland is betting that more outlets, its online offering and new products will help it cope in "a potentially difficult trading environment in the year ahead".
The retailer reported an 11 percent decline in 2013-2014 underlying earnings, citing the expansions.
Total sales rose 2.7 percent to 2.71 billion pounds ($4.55 billion) in the year to the end of March, but earnings fell to 202.2 million pounds from 226.3 million pounds, it said.
Iceland trades from 844 stores after adding 43 stores in the last financial year. It also acquired the franchised Iceland stores in Ireland, opened two more stores in the Czech Republic and launched exports to South Africa and the Middle East.
The firm is run by its founder Malcolm Walker, who led a management buyout in 2012 along with investors Brait S.A. based in South Africa, and the Landmark Group, based in the Middle East. ($1 = 0.5956 British Pounds) (Reporting by James Davey; editing by James Macharia)