Northern Foods revealed its bakery and pastry divisions had been seriously hit in the early weeks of 2006, as it announced it is starting a strategic review of its business this week.

The supplier’s biscuit sales in January and February were 12% lower than the previous year and the market continues to be heavily price-promoted, it said in a trading update for the year to April 1, 2006. Sales of pastry products in January and February were 11% lower than last year, it added.

Director of communications Hilary Baker told British Baker January is usually a slower month, due to shoppers cutting back after Christmas. However, the healthy eating debate “may be having an impact” as the overall market is down, she said.

The board has started to examine the business model, product portfolio and cost base, Ms Baker said, but added it would be “premature” to talk about closing factories. The frozen division has continued to perform well in very competitive trading conditions, Northern Foods said.

The board now expects profit before tax and exceptional items for the current financial year to be approximately £45m (compared to £62.2m the year before). Northern Foods will report on the review at its preliminary results, scheduled for May 31, 2006.