Aldi celebrates annual sales uplift of 13.5% but operating profit falls

Aldi, the UK’s lowest-priced supermarket, has announced record results for its latest financial year, with growth accelerating in 2017 as rising numbers of British shoppers switch their supermarket.

Sales in the UK and Ireland reached £8.7bn in the year to 31st December 2016 (2015: £7.7bn) – an increase of 13.5% (2015: 12%) despite overall grocery market growth of just 0.5% during the period.

Howver, operating profit declined by 17% to £211.3m as a result of the company’s continued investment in prices and infrastructure.

Aldi’s current growth rate in the UK is now 15.6%, according to Kantar Worldpanel data. The supermarket also said like-for-like sales were strongly positive during 2016 and have accelerated in 2017.

The business, which operates 726 UK stores, said growth had been driven by over 1m new customers switching to Aldi during the past year, attracted by its unique combination of the lowest prices and award-winning quality.

Aldi, the UK’s fifth biggest supermarket with a 6.9% share of the market, said its best-performing categories were its Specially Selected range of premium quality products, alongside fresh fruit and veg, fish and meat. In the current year so far, sales of Specially Selected are up 40%.

The privately-owned business said it planned to open a further 70 new UK stores in 2018 as part of its plans to reach 1,000 by 2022. A record 23 stores are planned to open in the final three months of the year.

The grocer, which reported a 15% increase in sales last December, said it planned to build on its record performance by introducing over 160 new products to its festive range, including a Sirloin of Beef with Porcini, Shallot and White Truffle Stuffing and a Dressed Side of Salmon, both from its award-winning Specially Selected Exquisite tier.

Aldi said a further 150 stores would open next year under its ‘Project Fresh’ initiative – a £300m investment programme to create more in store space for fresh, chilled and food-to-go ranges as well as simpler layouts, improved fixtures and brighter, wider aisles. By the end of 2018, a total of 250 stores will have launched in the new format.

The business, which has won over 270 awards for quality so far in 2017 – including Favourite Supermarket and Favourite Wine Retailer at the Good Housekeeping Food Awards 2017 just last week – also said it reformulated more than a third of its products last year to further improve quality.

Data from The Grocer, meanwhile, confirms Aldi is the lowest priced supermarket in the UK and 15.2% cheaper than its nearest competitor in its price survey.

Matthew Barnes, Chief Executive Officer – Aldi UK and Ireland, (pictured) 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.

“At the same time, we’ve been improving the quality of our range and introducing the new products our customers have asked for. The result is a carefully selected range of exclusive own-label brands and award-winning products.”

Aldi, which sponsors Team GB, said 77% of its total sales are from products sourced from over 1,000 British suppliers, including its entire core ranges of fresh meat, eggs, milk, butter, cream and bakery.

Earlier this year, Aldi was ranked as the best-performing supermarket for compliance with the Groceries Supply Code of Practice for the fourth year running, underlining its commitment to maintaining fair, predictable and sustainable prices within its supply chain and creating better conditions for growers and producers. This followed a survey of over 1,000 food and drink suppliers by industry watchdog, the GCA.

Aldi, which employs 29,000 people in the UK, was voted Employer of the Year in The Grocer Gold Awards this year. It was also rated the best performing supermarket for customer satisfaction in the recent UK Customer Satisfaction Index – a poll of over 10,000 shoppers - overtaking Marks & Spencer and Waitrose.

Independent research by the Centre for Economics and Business Research (Cebr), published earlier this month, also highlighted Aldi’s positive impact on the wider UK economy.

According to the analysis, the supermarket contributed to the generation of over £8.5bn in Gross Domestic Product in 2016 through job creation, spending with British-based businesses, taxes and investment. It also supported almost 146,000 direct and indirect jobs in the UK, which Cebr expects to rise to at least 205,000 by 2022.

Meanwhile, consumers could have saved an estimated £2.2bn last year if they had shopped at Aldi rather than with the Big 4 supermarkets, according to the Cebr’s report.

Barnes added, “We’re really proud of our track record and commitment to Britain – from the lowest prices and best service for our shoppers, to the highest wages for our people and to the best relationships with our suppliers.

“The fact that more and more customers walk through our doors every day of the week gives us the confidence to carry on investing – in people, jobs, stores and our distribution network – and continues to fuel our growth right across the UK.”

Last year, the business invested over £450m of capital expenditure in opening new stores and improving its distribution centres in the UK and Ireland, bringing total investment over the past five years to £2bn. Aldi said future capital expenditure plans remained entirely unaffected by the UK’s decision to leave the EU and that it expects to invest £459m during 2017.

Commenting, Matthew Barnes added: “These results and our strong performance during 2017 mean we are confident and excited about our future plans. We continue to do what we have always promised – invest in our prices to ensure Aldi customers enjoy outstanding value, always.”