Aldi sales reach record level as price cuts and investments hit profits

Aldi has seen sales jump to record heights despite profits slipping by nearly a fifth as the supermarket drove investment into cutting prices and expanding its reach.

The German discount grocer said annual sales in the UK and Ireland rose 13.5% to €9.8bn in 2016, with the firm enticing more than one million new customers into its stores over the period.

However, operating profit was down 17% to €23.2m due to an ongoing investment drive, which saw it commit €500m to opening new stores and improving its UK and Ireland distribution centres.

The supermarket group plans to plough further funds into launching another 70 UK stores in 2018 in a push to open 1,000 stores by 2022.

Matthew Barnes, chief executive of UK and Ireland, 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."

Aldi said it secured bumper sales growth despite the wider grocery market expanding by just 0.5% over the period, according to industry figures from Kantar Worldpanel.

Its sales were partly boosted by a strong Christmas period, with December sales climbing 15% in 2016.

However, gross profits fell 7% to €367.4m, down from €396m in 2015.

As part of its investment, Aldi said it would launch another 150 stores under its €340m Project Fresh strategy, which aims to carve out more space for its fresh, chilled and food-to-go ranges.

It said Britain's vote to leave the European Union had no impact on its investment plans and it would push €519m back into the business during 2017.

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