Discounter Lidl to step up UK store openings

By James Davey

LONDON (Reuters) -The British arm of German discount supermarket chain Lidl will accelerate its new store openings in the next few years after they slowed to just 15 in its 2023/24 financial year, it said on Wednesday.

Having opened 50 stores in 2022/23, Lidl GB focused its investment in the year ended Feb. 28, 2024, more on improving its distribution and warehouse infrastructure and existing stores. It ended the period with 964 stores.

However, CEO Ryan McDonnell said openings would rise to 23 in 2024/25, to around 40 in 2025/26, “and hundreds more after that”.

He said he was unsure what the ceiling for Lidl GB would be.

“I don’t know whether that’s 1,500, 1,600, 1,700, I can’t say, but the ambition is really going to be about the market demand and our brand development,” he told Reuters in an interview after the grocer reported annual results.

Rival discounter Aldi has a target of 1,500 stores.

Lidl GB, which is owned by Germany’s Schwarz Group, and Aldi have expanded rapidly over the past two decades, transforming the UK supermarket scene and forcing traditional players, including market leader Tesco and No. 2 Sainsbury’s, to compete more aggressively on price.

Aldi is Britain’s fourth largest grocer with a market share of 10.4%, while Lidl is No. 6 with 7.7%.

Lidl is currently Britain’s fastest growing bricks and mortar grocer, according to market researcher Kantar.

It made a pretax profit of 43.6 million pounds ($55.4 million) in 2023/24 versus a loss of 76 million pounds the year before. Revenue rose 16.9% to 10.9 billion pounds, driven by strength in fresh fruit and vegetables, and bakery products.

Profit was driven by volume growth from new and existing customers, and focused cost control to drive efficiencies and margin,” Lidl GB said.

McDonnell said the business had “great momentum” going into Christmas but cautioned last month’s UK government budget, which raised employment taxes and hiked the minimum wage, would add “tens of millions” of pounds to costs next year.

($1 = 0.7868 pounds)

(Reporting by James Davey. Editing by Sarah Young and Mark Potter)