Lidl has said it took £58m in additional sales from traditional supermarkets in the past month, as shoppers look for ways to save money, after quadrupling profits in a bounce back from Covid disruption.
The German-owned discount grocer, said its British sales rose 1.5% to £7.8bn in the year to the end of February but pretax profits soared 319% to £41.1m as the group trimmed costs as measures to control the Covid-19 virus eased. The company also saw a surge in non-retail income, such as selling advertising and renting out property and recycling.
The company, which operates 935 stores across England, Scotland and Wales and employs more than 28,000 people, said the profit increase had come despite a £50m rise in pay for hourly-paid staff and £653m spent on 50 new stores and other assets including distribution centres in Luton, Bedfordshire, and Belvedere in south-east London.
The group plans to open 50 stores in the year to February, including 15 before Christmas, further ramping up competition with its bigger rivals, most of which are not opening many new stores.
Ryan McDonnell, the chief executive of Lidl GB, said the company was serving 770,000 more customers a week than last year. “We are a brand with our tails up and heading into Christmas on the march,” he said. “This is our time.”
He said shoppers werestocking up on mainstay Christmas items with sales of party food up by 21% and panettone up 8% on last year, indicating they were buying slightly earlier than usual and also trading up to the budget chain’s higher priced options. The company said it had also sold a higher proportion of British meat, poultry, eggs and pork than other supermarkets.
Lidl’s rise in sales and profits comes as British shoppers increasingly head to discount supermarkets in an attempt to keep food bills down as grocery price inflation reaches its highest level in a decade.
Speaking before the chancellor’s autumn statement on Thursday, McDonnell said he hoped Jeremy Hunt would be “pro consumer” and offer support for those struggling with a cost of living crisis that meant “less money in household budgets”.
He would not say by how much Lidl had increased prices but admitted the retailer was “not immune” to cost inflation and some of that had been passed on.
McDonnell added it was “hard to predict” how inflation would progress as there were different rates of cost increase depending on the product type but said Lidl was focused on “forensically comparing baskets and trollies against the competition and always making sure we are the best value.”
During the past year, Lidl has overtaken the Co-op to become the UK’s sixth-largest supermarket chain, while the rival discounter Aldi leapfrogged Morrisons to take fourth place. Sales have risen at both discounters by more than 20%, according to the data from the market analyst Kantar, much faster than at traditional supermarkets.