Aldi’s UK sales surge, profit dips

aldiGlobal discount supermarket chain, Aldi, has posted a 12-per cent year-on-year profit increase to £7.7 billion from £6.9 billion a year ago.

The company’s operating profits fell 1.8 per cent to £255.6 million from £260.4 million in 2014.

Greg Bromley, senior analyst at Verdict Retail, said while Aldi has posted impressive growth for its 2015 financial year, its operating profit dipped as a result of heavy investment into its proposition.

“The sheer scale of Aldi’s growth in the UK cannot be understated – sales of £7.7 billion are double what they were three years ago. However, while its double digit sales growth still makes it the envy of its rivals, it is less than half what it was in its 2014 financial year (+30.7 per cent),” said Bromley.

“This illustrates that Aldi is now an established and mature market player, and no longer the incumbent market disruptor it was just a few years ago.”

According to Bromley, as rival Lidl has continued to make progress, and the ‘big four’ have shown signs of recovery, Aldi has begun to diversify over the past year to sustain interest in its proposition.

“This has included an expansion of its premium tier Specially Selected products (sales increased by 20 per cent in 2015), while it has increased British sourcing across fresh produce as it seeks to reassure consumers of the quality and provenance of its offer,” he added.

The discount supermarket retailer has announced plans to refurbish over 100 stores in 2017, adding in new fixtures for new ranges such as food-to-go, while it is also set to open a further 70 new stores.

“The scale of its investment plans is impressive considering the wider macroeconomic backdrop, and Aldi states its future investment plans are unaffected by Brexit,” Bromley said.

Bromley said Aldi remains the market leader on price, however this comes at a cost, with its operating profit suffering as a result.

Matthew Barnes, the company’s chief executive, has claimed 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, and rivals such as Morrisons and Asda roll out waves of new price cuts.

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