Thursday 14 September 2023

Lidl GB Swings To Annual Loss Amid Battle To Keep Prices Down

Lidl has revealed that its business in Britain swung to a loss in its last financial year after battling to keep prices low in the face of rising costs “across the board”.Over the 52 weeks to 28 February 2023, the discounter posted a pre-tax loss of £75.9m against a profit of £41.1m the previous year. Underlying earnings (EBIT) fell from £79m to £28.5m.

Lidl noted that it had invested over £100m in keeping down during the cost of living crisis, helping it attract an additional 1.4 million shoppers. Its market share during the period increased from 6.1% to 7.1% – the fastest growth experienced by the discounter in the past five years.

The company opened 50 new stores during the year and invested heavily in staff pay and expanding its distribution network. This included building Lidl’s largest Regional Distribution Centre (RDC) in the world, which officially opened in Luton earlier this month following a £300m investment.

“We’ve always had a clear commitment to offer the best value to our customers, and that is a promise we will always keep, even in uncertain economic times,” said Ryan McDonnell, CEO of Lidl GB.

“Alongside preserving this price promise, rewarding our people and maintaining long-term relationships with our suppliers will always be a priority. As a privately-owned business, we have the ability to make decisions that we know will have immediate benefits for our people, customers and suppliers and long-term benefits for our business.”

He went on to say: “The entire retail market has seen inflation, and we are no exception. However, for us, what is important is that our price gap to the traditional supermarkets is as strong as it has ever been. We’ve invested in keeping our prices low for customers in what has been a very challenging year for most and, with many more customers flooding through our doors each day, our ambition is to ensure that every single household has access to high quality, affordable food at their local Lidl store.”

Next year will mark 30 years of Lidl in Britain, with the business now operating over 960 sites and 14 distribution centres. McDonnell stated that there was “no ceiling on our ambitions for the next 30 as we see the potential for hundreds of new stores”.

Last week, Aldi opened its 1,000th store in the UK and outlined plans to open 500 more.

NamNews Implications:
  • A key issue has to be the extent to which Lidl operations in other countries are prepared to fund UK losses at their expense…
  • That said, discounters in the UK are on a roll and global Lidl may be prepared to trade off share growth vs. local discontent.
  • i.e. Lidl has to fuel available growth…
  • …and according to their management, this investment will continue.
  • i.e. there was “no ceiling on our ambitions for the next 30 as we see the potential for hundreds of new stores”.
  • Address your Lidl strategies accordingly…
#Discounters #Aldi #Lidl #Share

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