Aldi revealed on Monday a slowdown in its UK sales growth over the Christmas season compared with the previous two years even as revenues exceeded £1bn for the first time as consumers bought alcohol and premium food ranges.
Sales in the four weeks to Christmas Eve climbed 7.9 per cent compared with the same period a year ago. That growth rate is less than the 15 per cent reported for the equivalent four-week period in 2017 and growth of around 10 per cent in the same period of 2018. For the whole of 2018, sales grew 11 per cent.
“Although we saw strong growth across all key categories, sales of our premium Specially Selected range surpassed expectations,” said Giles Hurley, chief executive of the German group’s UK subsidiary.
The group’s premium products and the equivalent “Deluxe” items at rival Lidl have been instrumental in broadening the popularity of limited-range supermarkets among middle-class consumers, helping lure them away from traditional supermarkets.
As in previous years, Aldi did not provide a like-for-like sales figure. Most of the growth is likely to have been driven by new store openings; the group traded from 47 more stores at the end of 2019 compared with the end of 2018. It aims to have 1,200 stores by 2025, although it is finding it difficult to secure suitable sites in parts of the south of England.
At its full-year results presentation in September, Mr Hurley said that Aldi was still achieving same-store sales growth, although the group’s operating profit margin had fallen below 2 per cent as it invested heavily in premium product ranges, new stores and distribution facilities.
Aldi reports at the start of a busy week for UK grocers. Wm Morrison, the smallest of the “big four” supermarkets, is due to release an update on Tuesday. It will be followed by J Sainsbury on Wednesday and Tesco on Thursday.
Analysts are generally expecting subdued Christmas trading after a comparatively strong period in 2018 and with consumers reportedly feeling cautious.
James Anstead at Barclays said in a preview note to clients that he expected sales at Morrisons to continue declining “at a worrying pace” but that Sainsbury’s will feel confident enough to reiterate its full-year profit forecast and that Tesco — while still posting a decline in UK same-store sales — will turn out the best performer.
