Aldi to invest £1.3bn and create 4000 jobs after profits bounce back

Business

Discount grocer Aldi has pledged to invest £1.3 billion on expanding in the UK after posting a rise in sales and profits.

The retailer bounced back from a sharp fall in profits in 2018 to post a 49% increase in pre-tax profits to £271.5 million in 2019.

Total UK and Ireland revenues rose 8% to £12.28 billion, although a like-for-like store sales comparison was not given. The company said customer numbers were up 6% last year, to 17.6 million.

Aldi vowed to spend £1.3 billion over the next two years on new and existing stores and its distribution centres. It plans to add 4000 new jobs on top of the 3000 created this year, in marked contrast to the wave of job losses across the High Street.

Aldi said it had seen margins improve last year, “with efficiencies of scale offsetting continued investment in prices”.

The grocer expects to open 100 UK stores across 2020 and 2021 – it has a long-term target of 1,200 stores by 2025. It will also spending on improving 100 existing stores.

Its UK boss Giles Hurley said: “The founding principle of our UK business back in 1990 was to offer a carefully-selected range of great quality products at the lowest prices. Whilst we’re continuing to innovate to give customers an even better experience and greater convenience, our core philosophy remains unchanged.

“With the UK’s economic outlook increasingly uncertain, families are more concerned about their grocery bills than ever. We’ve seen before that our customers need us most in times of financial hardship, which is why our commitment to remain Britain’s lowest-priced supermarket is more important than ever.”

The Covid crisis has left Aldi and archrival Lidl somewhat exposed by their lack of large stores or online offer. Customers have switch towards doing fewer shops for more items – pushing them towards the grocers with large superstores, where social distancing is easier. There has also been a surge in online shopping, and the German discounters do not have online grocery operations as it is difficult to make money while delivering to homes and offering low prices.

Aldi this month introduced a trial of a click-and-collect service for the first time, at cost of £3.99 for customers.

The latest Kantar data for the 12 weeks to September 6 showed Aldi’s sales growing at a respectable 10%, behind Lidl at 11.4%, Ocado at 41.2%, Iceland at 20.8%, The Co-op at 13.4%, and big four rivals Morrisons and Tesco, at 12.9% and 10.5% respectively. Aldi is Britain’s fifth largest grocer according to Kantar, with a 8% market share, behind Morrisons with 10.1%.

Since the start of Britain’s Covid lockdown, grocers have seen huge growth has custom usually spent in restaurants was diverted to retailers.

However, Britain’s supermarkets did a slowdown in sales as a result of the Eat Out to Help Out scheme.

In total, consumers spent £155 million less in the supermarkets in the four weeks to September 6 compared with July, with alcohol sales taking a hit. Alcohol sales dipped month on month, with wine down 5% and beer down 10%.

The Eat Out to Help Out scheme ran each Monday to Wednesday in August offering Britons discounted food at restaurants, cafes and pubs, supported by taxpayers.