Aldi UK: strong results and rapid expansion

Date : 17 September 2019

Aldi's FY18 results for the 12 months to December 31st reveal growing sales but falling profits. We look at these, and the retailer's expansion plans in more detail.

Positive growth in 2018

  • Sales increased 11% to £11.3bn
  • Operating profit of £197.9m, decreasing 26% from £265.9m in 2017

This is the fourth year of falling profits for Aldi. It reflects the continuous strategy of maintaining a price gap over other retailers and also investing in its estate, infrastructure and shopping experience. The retailer has said despite the fall in profits it remains committed to always offering the lowest prices in the market whilst investing in future expansion.

Growing the UK estate

Aldi is targeting opening;

  • 1,200 stores in the UK by the end of 2025
  • Over 100 new stores by 2021

The retailer has said this will be an investment of £1b in total by 2020. Aldi UK CEO Giles Hurley told the BBC;

"The reality is that almost 50% of the population of the UK doesn't currently shop with us and they tell us the main reason for that is they don't have a store near us."

London expansion

Aldi is targeting opening;

  • 55 stores within the M25 by the end of 2025
  • Over 40 new Local stores in the long term

Aldi opened its first Local store as a trial in March 2019. The success of which led to opening eight more stores in the new format. Although the Local stores are around half the size of a standard format store, this is not a move into convenience, but instead a way of adapting to trading in London. Aldi has said it does not plan to use this format outside of the capital.

The retailer has a lower market share in London, compared to the rest of the country. With the challenges of operating in the capital such as difficulty to secure large sites with parking, Aldi has had to flex its standard format to suit. The retailer has made subtle flexes to its standard format such as reducing the range to 1,500 from 1,800 SKUs and adding self-service checkouts.

Aldi sees great potential for the Local format in London, imagining store numbers could reach between 200-250 in the future.

The retailer has continuously hit its expansion targets in the past and we expect it to sustain this rapid pace in the future, leading to further market share gain.

For subscribers looking to find out more read our Aldi Local Balham store visit report.

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