1. Aldi plans 300 mn stg UK store refresh as 2015 profit falls

Aldi plans 300 mn stg UK store refresh as 2015 profit falls

The British arm of German discount supermarket Aldi said on Monday it would spend 300 million pounds ($389 million) sprucing up its stores over the next three years as it reported a 1.8 percent fall in 2015 profit due to price cuts.

By: | London | Published: September 26, 2016 1:55 PM

The British arm of German discount supermarket Aldi said on Monday it would spend 300 million pounds ($389 million) sprucing up its stores over the next three years as it reported a 1.8 percent fall in 2015 profit due to price cuts.

The firm said a plan to have 1,000 UK stores by 2022 was on track and said future capital expenditure plans were unaffected by Britain’s vote to leave the European Union.

Aldi said it has cut prices by 30 percent of its products so far in 2016, with that investment made possible by the strength of its balance sheet, which had net assets of 2.1 billion pounds ($2.7 billion) at the end of 2015.

Aldi and its German discount rival Lidl have transformed the competitive landscape in UK food retailing over the last five years and remain Britain’s fastest growing supermarkets with a combined market share of 10.8 percent, according to the latest industry data.

With their low price, limited assortment, low cost strategy they have won market share from Britain’s traditional big four players – market leader Tesco, Sainsbury’s, Asda and Morrisons – forcing them to cut prices, improve product quality and boost customer service.

For the year ending Dec. 31 2015 Aldi made an operating profit of 255.6 million pounds, down from 260.3 million pounds in 2014.

Sales, however, increased 12 percent to a record 7.7 billion pounds, twice their level three years ago, as the discounter opened new outlets.

Aldi said it increased the number of products sourced from British suppliers to 77 percent from 69 percent in 2014.

The 300 million pounds store investment plan includes newly designed fixtures for beers, wines and spirits, fresh produce and baby and toddler, as well as a new food-to-go fixture.

Stores will also have a significant increase in chilled space, new colours, signage and lighting.

Aldi currently trades from 785 stores in the UK and Ireland. It said plans for 1,000 UK stores by 2022 were on track with 70 new sites scheduled for 2017.

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