Aldi slides into red as sales growth falters

Discount supermarket Aldi has slumped into the red in a sharp turnaround in fortunes following its boom year in 2008, figures showed today.

The German-owned chain blamed the £54.2m (€62m) loss in 2009 on heavy investment in revamping stores and buying new outlets as it tried to take on Britain’s resurgent big four supermarkets.

Just two years ago, Aldi, along with fellow discount chains Lidl and Netto, was setting market-share records in the low-cost sector as hard-pressed consumers looked to cut spending.

In 2008, it made a £93m (€106.4m) pre-tax profit but last year, despite opening 45 new stores, sales only advanced 1.7% to a little over £2bn (€2.3bn), figures released to the UK's Companies House showed.

Matthew Barnes and Roman Heini, joint managing directors at Aldi, said: “We have invested significantly in upgrading all our existing stores and this has had an impact on the 2009 result.

“In addition, we have initiated a disposal programme of older stores and assets surplus to requirements, which alone accounts for more than half the loss.

“We are confident that our continuing investment programme will lead to both increased turnover and profitability.”

Aldi ramped up its market share in 2008, achieving year-on-year growth of 23.9%, which prompted the press to coin the term “The Aldi Effect” to describe companies thriving during the recession.

But in 2009, discount supermarkets started to see a decline in growth as the “big four” UK chains – Tesco, Sainsburys, Asda and Morrisons – fought back with slashed prices.

Recent figures from market analysts Kantar revealed Aldi’s market share in the three months to September had dropped to 2.9% from 3% last year.

Earlier this week, Tesco, Sainsbury’s and Marks & Spencer posted results and trading updates for 2010.

Tesco turned in a 12.5% rise in half-year profits to £1.6bn (€1.83bn), Sainsbury’s reported strong like-for-like sales growth of 2.9% in its second quarter, and Marks & Spencer posted a larger-than-expected same store sales growth of 5.3% in its second quarter.