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UK: Lidl for now relaxed on losses and focuses on opportunities

Discount Retail Chain Lidl UK (owned by the German Schwarz Group) brushed aside a 76 million pound ($95 million) annual loss, saying the business was squarely focused on the long-term opportunity. Lidl GB, established in 1994, said it had the "full support" of its German parent the Schwarz Group to open hundreds more stores.

"As a privately-owned business we have the ability to be very agile and take those decisions which will have immediate benefits for customers, our colleagues and suppliers with the long-term benefits of the business in mind," CEO Ryan McDonnell told Reuters.

"We're still very much in a phase as a brand in Britain of laying down the foundations to keep growing," he said in an interview, pointing to the opening of 50 new stores in its 2022/23 year, an investment of 100 million pounds to keep a lid on prices and 50 million pounds on increasing staff wages. Lidl GB and rival discounter Aldi UK are Britain's fastest growing grocers, according to market researcher Kantar.

Their appeal has grown during the cost-of-living crisis as Britons have sought savings and, unlike their traditional rivals, they continue to open lots of new stores. Currently trading from over 960 stores with a 7.6% share of the UK grocery market, McDonnell said there was "no limit" to Lidl GB's expansion. "Inevitably, we're going to get into double-digit market share and beyond," he said.

Aldi UK, last week raised its long-term target to 1,500 stores. But the discounters' profitability has not matched their stellar sales growth. Lidl GB's sales rose 18.8% to 9.3 billion pounds in the year to Feb. 28 as it welcomed an additional 1.5 million customers, but it sunk to a 76 million pound loss versus a 41 million pound profit in 2021/22.

The loss reflected Lidl GB's investment and high inflation which led to an increase in costs "across the board". The discounters' performance has forced the traditional major players, including market leader Tesco and No. 2 Sainsbury's, to compete more aggressively and they have accepted a profit hit to keep prices down.


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