Lidl’s UK business has bounced back into profit after it slowed expansion in favour of improving existing stores, spurring a jump in sales to above £9bn.
The German-owned discounter, which is close to overtaking Morrisons to become the UK’s fifth-largest supermarket, said it had gained more than 300,000 new shoppers and 60% of Britons visited the chain at least once year.
Profits rebounded in the year to February 2024 as the group cut back investment, opening just one net new store, according to the accounts, compared with 45 in the previous year.
The company began slowing down the rate of new stores last year, after several years of frequent store openings. However, it plans to open 40 new outlets next year and 18 in the coming months.
The grocer notched up a near-17% jump in revenues last financial year, to £9.3bn. Lidl said its growth was driven by significant investment in upgrading stores with more fridges to improve product freshness, expanded ranges and competitive prices as well as a 24% rise in users of its loyalty scheme.
Ryan McDonnell, the chief executive of Lidl GB, said: “We’ve come a long way since we opened our first stores here 30 years ago, from stocking jars of frankfurters to now having over two-thirds of our products sourced from British suppliers.
“Now, 60% of households are choosing to shop at Lidl, and they’re coming back more frequently, which is a fantastic sign of increasing loyalty. We have great momentum and, although our ambitions have no ceiling, we won’t rest on our laurels.”
McDonnell also said that men were buying more from its middle aisle of unusual, limited-time stock, from toys to thermal underwear. “We often get partners at odds with each other because men have disappeared up the aisle and are buying things they maybe already have,” he told the BBC.
Lidl said its strongest growth came from fresh produce, where sales rose 22%. Bakery sales also increased strongly, making Lidl the second largest retailer in the category, ahead of much bigger chains including Asda and Morrisons.
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Lidl is the UK’s fastest-growing supermarket. The growth of its discounter rival Aldi has slowed amid revived competition from UK’s two biggest chains, Tesco and Sainsbury’s, which both offer to price-match Aldi on many frequently bought items.
Lidl’s performance slowed during the pandemic, when many shoppers switched to buying online, a service it does not offer on regular groceries.