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Lidl has slumped into an annual loss in the UK despite growing sales as shoppers seek bargains, as the discount supermarket reckons with the costs of aggressive expansion, rising staff costs and price cuts.
The Germany-based grocery chain reported a loss of £75.9m in the 12 months to the end of February, compared with a pre-tax profit of £41.1m the previous year.
However, Lidl’s revenue rose by 18.8% to £9.3 billion, with Lidl saying it served more than 1.5 million customers during the period.
Lidl joins German discount rival Aldi in two decades of rapid expansion in the UK as cost-conscious consumers look for ways to save on essentials. According to Kantar, they now control 17.7% of the UK grocery market. The chains have gotten a boost as more shoppers flock to their stores due to the recent cost-of-living crisis.
Lidl controls 7.6% of the grocery market and is currently the UK’s sixth largest supermarket chain. The grocer opened a further 50 stores in the UK during the year, taking its total to more than 960, and this month opened its largest-ever warehouse at a cost of £300m.
However, expansion costs affected Lidl’s performance. The group said the losses stemmed from investments and “an across-the-board increase in costs due to a challenging inflationary environment”. The group said it had cut prices but also added £50m to its staff costs by raising wages.
Some analysts believe Britain’s discount stores are approaching saturation point.
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