Aldi attracted 761,000 new customers into its stores this year, resulting in the equivalent of an extra £68M in sales every month compared with the previous year. The company’s UK grocery-wide market share was recorded as 6.2% – an Aldi record.
The business reported a drop in operating profits of 1.8% to £255.6M, despite the record sales. It said the fall reflected its “continued investment in prices”. Aldi lowered prices on 30% of its products since the beginning of 2016.
Aldi UK and Ireland ceo Matthew Barnes said: “Aldi has continued to win the trust of millions of new customers thanks to a single, simple and unbroken promise – to provide the very best quality products at prices that cannot be beaten. This explains our performance and underpins our investment.
‘Prices that cannot be beaten’
What HSBC Global Research say
- “On the figures released today, it seems that Aldi is feeling some pressure from increased price competition by the Big4. Lidl recently saw its UK CEO depart, with the press suggesting this may be due to weak performances at Lidl. Our view is that the discounters were allowed to grow unencumbered 2009-14, but are now facing much tougher competition, particularly around base pricing as the Big4 move away from multi-buys.”
David McCarthy, Analyst
“Our promotion of British-sourced products, our relationships with British suppliers and our support for [Olympics] Team GB demonstrate our pride in Britain and our commitment to providing the very best quality British food.”
Alongside the financial update, Aldi announced it would invest £300M into its UK stores over the next three years, including newly-designed fixtures, an extension to chill spaces in its stores and growth of its own-label fresh produce.
It also announced a new food-to-go fixture, and over 100 stores would be refurbished in 2017. The investment would also allow the company to open 70 new stores by the end of next year.
Meanwhile, City analysts at Verdict Retail hailed Aldi’s results, and said “its double digit sales growth still makes it the envy of its rivals.”
‘The envy of its rivals’
Verdict Retail’s senior analyst Greg Bromley said: “The scale of [Aldi’s] investment plans is impressive considering the wider macroeconomic backdrop, and Aldi states its future investment plans are unaffected by Brexit.
“Aldi remains the market leader on price; however this comes at a cost, with its operating profit suffering as a result. Barnes claims the investment of margin to maintain its price advantage is its secret, but the grocer is likely to have to forsake an even greater share of this margin as the UK food and grocery market shows no signs of becoming less competitive.”
Aldi financial year results – at a glance
- £7.705bn in sales in year to December 31 2015
- 12% rise in sales year-on-year
- 761,000 new customers
- Operating profits down 1.8% to £255.6M
- £300M investment for 70 new stores and refurbishments