Hard discount grocer Aldi has reported its pre-tax losses edged up in 2010 after it suffered impairment charges from a store disposal programme, but sales grew strongly.
The German grocer, which along with Lidl has been gaining favour once again this year as consumers tighten their purse strings, reported a pre-tax loss of £56.9m in the year to December 31, up from £54.2m the previous year, according to documents filed at Companies House.
The group kicked off a store disposal programme in 2009 of older stores and surplus assets which continued into 2010. It decided to sell off several sites which did not fit the core business model, and that resulted in impairment provisions of £57m being charged to the figures reflecting the market value of those sites. Aldi said this accounts for the whole of the loss before tax.
Aldi said in its report that the directors are confident that the steps they are taking will increase both turnover and profitability in the future.
Turnover increased by 4.6% to £2.1bn and the retailer reported an operating profit of £18.7m in the year, compared with an operating loss of £21.2m the previous year.
Group managing directors Matthew Barnes and Roman Heini said in a statement: “We initiated a disposal programme of older stores and assets surplus to requirement two years ago. This programme has continued throughout 2010 and accounts for the whole of the loss.
“In 2011 we are beginning to see the benefit of the investment in our products and stores, with both increased turnover and profitability.”
Aldi did not provide details of current trading.
Aldi and Lidl’s growth surged at the height of the banking crisis in 2008 with middle class shoppers trying out the discount stores for the first time. Their popularity since faded and Aldi plunged into a £54m loss in its 2009 financial year.
However, as the Government’s cuts start to take effect and consumer confidence is low, Aldi and Lidl are starting to see something of a renaissance. According to Kantar, Aldi reported growth of 24.4% in the 12 weeks to August 7, and an all-time record share of 3.6%, up from 3% the previous year. Lidl reported growth of 13.8%, and its share upped from 2.4% to 2.6%.
During the year Aldi opened 24 shops, and extended and refurbished several existing stores.