Lidl’s operations in Britain are back in the black, with the discounter outlining plans to open even more stores.
Latest accounts for the year to 28 February 2021 show Lidl GB recorded a pre-tax profit of £9.8m, compared to a loss of £25.2m in the previous 12 months when it invested heavily in store openings, recruitment, and its supply chain.
Lidl’s total sales rose 12% to £7.7bn, boosted by 55 new openings and raised demand for food & drink in supermarkets during the pandemic.
Lidl GB Chief Executive Christian Härtnagel said: “We delivered an impressive trading performance in the period which was supported by our continued investment in new and existing stores, product innovation and our people.”
Härtnagel stressed that the company was well prepared for Christmas and had overcome the supply challenges of the summer. “In a normal store on a normal day, there are no obvious gaps…there are no systemic issues anymore.
“But it is still nowhere near normal. There are labour shortages everywhere … everything is much harder work than in a normal year.”
The company’s accounts also noted that Brexit has had a detrimental impact on the business. The firm highlights that since the end of the transition period, there has been an increase in administration for importing and exporting goods in and out of the UK.
Lidl added that it had suffered from delays at the UK border due to missing Government guidelines and additional certification and licensing checks. It said customs agents’ capability and capacity have been “stretched to a maximum”, which had “limited their ability to process goods more efficiently”.
Due to customs duties and import charges, Lidl has also seen costs rising on an item-by-item and shipment-by-shipment basis.
Härtnagel said the company was ready for another round of Brexit bureaucracy in January when customs declarations on produce arriving into the UK from the EU will be required. He highlighted that the experience of its owner, the Schwarz Group. “They have stores in Serbia, in Switzerland … they are very used to dealing with these issues,” he said, referring to countries that are outside the EU but do much of their trade with the bloc.
Meanwhile, the discounter announced today that it plans to increase its number of stores in the UK to 1,100 by 2025, up from 880 currently.
Despite the challenges posed by the pandemic, Lidl stated that it was still on track to reach its previously stated aim of having 1,000 stores by the end of 2023.
The additional 100 new stores will be across England, Scotland and Wales and will feature solar panels and electric vehicle charging points. Lidl, which currently has a 6.2% share of the UK grocery market, stated that sites of particular interest include town centres, retail parks, and metropolitan locations.
Härtnagel commented: “Our new store target today marks a significant investment for the business. We remain committed to our bricks and mortar strategy and maintaining our store opening pace; roughly a store a week for the next four years.”
NAM Implications:
- NPBT 0.1% is still very slender, but on the right side of breakeven.
- And these discounters have more experience of excelling on slender margins than most…
- And Lidl continuing to invest during loss-making lockdown…
- …shows they are still a threat to the UK mults.
- Meanwhile, Brexit caused ‘an increase in administration for importing and exporting goods in and out of the UK’
- ‘Our stores in Serbia and Switzerland are very used to dealing with these issues’…
- …referring to countries that are outside the EU but do much of their trade with the bloc.
- i.e. All showing Lidl are still a threat to the UK mults.
