Aldi bags record UK sales but profits drop on investment costs

 
Rebecca Smith
Profits Rise At Aldi Supermarket Chain
Aldi is eyeing 70 new UK stores next year (Source: Getty)

German budget grocer Aldi's quest for UK domination continues as its sales growth picked up in the UK, though profits dipped in its full-year results due to "continued investment in prices and infrastructure".

The supermarket onslaught continues however, as the firm outlined plans for 70 new supermarkets for 2018 amid its efforts to hit 1,000 by 2022.

Read more: Look out Amazon: Aldi's getting into online grocery delivery in the US

The figures

Sales in the UK and Ireland were up 13.5 per cent to £8.7bn for the financial year, marking a £1bn increase on 2015.

The company said its sales and market share have more than doubled in under four years, and that over a million shoppers have made the switch to it from other supermarkets.

Profits took a hit however, with operating profit down 17 per cent to £211.3m and gross profit down seven per cent at £324.5m. Aldi said its commitment to low prices and investment in stores and distribution had buffeted profits, reflecting the intense competition in the sector.

In July, the firm announced plans to create 4,000 jobs in Britain as part of hefty expansion plans.

Why it's interesting

Aldi said sales continued to surge for the year to 31 December 2016 despite overall grocery market growth of just 0.5 per cent for the period.

The supermarket is the UK's fifth largest, holding a 6.9 per cent share of the market, behind Tesco, Sainsbury's, Asda and Morrisons.

According to the latest figures from Kantar Worldpanel, the budget giants of Aldi and Lidl are still in the ascendancy despite the tough competition, with Lidl now neck and neck with Waitrose. Both have a 5.3 per cent share of the market.

Between them, Aldi and Lidl now account for £1 in every £8 spent in UK supermarkets, up from £1 in £25 a decade ago.

What the company said

Matthew Barnes, chief executive for Aldi UK and Ireland, said:

Our growth is accelerating, thanks to the hundreds of thousands of new customers switching their shop to Aldi. This is happening right across the UK and is all down to a simple, straightforward commitment – products comparable to the leading brands and supermarket premium ranges at the lowest prices in Britain.

We’re doing everything we can to insulate customers from those cost increases, making sure our prices are the lowest in the UK, every day of the year.

Read more: Aldi helps over 400 suppliers by reducing payment terms

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