Operating profit at Aldi Ireland down 44% as chain launches €75m expansion plan

Operating profits at the Irish arm of Aldi, which is plotting a major expansion in Dublin, topped €39 million in 2021, a 44 per cent decline from the previous year, as the German-owned supermarket chain grappled with higher prices and the disruption of Covid-19.

New accounts for Aldi Stores Ireland show that the chain achieved sales of close to €2 billion in 2021, up 1 per cent from the first pandemic year. This compared with the 14 per cent sales growth rate Aldi experienced in 2020, when consumers’ shopping habits were altered significantly by public health restrictions.

In a report attached to the accounts, the directors said 2021 was another year of growth for the business, albeit at a slower pace.

“The comparatively lower rate of turnover growth reflects the adverse impact of Covid-19 restrictions which significantly disrupted normal shopping patterns throughout the period under review,” they said.

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Meanwhile, the group’s cost of sales increased more than 2 per cent in the year to more than €1.9 billion while administrative expenses surged by about 35 per cent in 2021 to €53.7 million, eating into Aldi’s margins. Wage and salary costs grew by 5.8 per cent to €157.7 million, with the group hiring an additional 300 employees over the period, bringing its overall Irish headcount to 4,744.

The retailer has 155 stores nationwide.

Operating profits of €39.8 million were down 44.8 per cent from more than €72 million in 2021. After tax, Aldi’s Irish business generated profits of €31 million, a decline of almost 50 per cent from 2020.

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The directors said the decline reflects Aldi’s “resolute focus” on keeping prices low against the current inflationary background. “The company made substantial investments to keep prices low for customers, in addition to further investment in staffing and remuneration,” they said.

In total, Aldi invested €68 million in 2021 to “improve and increase the company’s store and distribution network”, including the opening of four new stores during the year.

In a statement on Monday, the supermarket chain restated its ambition to expand its footprint in Dublin and reiterated that it is examining 25 sites as potential locations for 11 new stores, with plans to invest €75 million.

Last month, Niall O’Connor, group managing director of Aldi Ireland, said the chain “has an interest” in 25 sites but conceded that Dublin has become “a bit of a problem for us”, given that rivals such as Dunnes Stores and Tesco have a larger footprint in the capital.

“We have capital to invest. There is an opportunity for us here [in Dublin]. It is frustrating that we are not further ahead [in the city] at a time when Dublin customers need us most,” said Mr O’Connor.

On Monday, Mr O’Connor said: “We are acutely aware of the impact of this current inflationary period on our customers, our people, our suppliers and on the communities where we operate. This is why it is important that the necessary conditions are in place to facilitate and support our expansion. New stores in 2022 means we create employment where it matters, we create opportunities for local businesses and suppliers to supply a large retailer and we offer choice in retail for customers at a time when competition and low prices matter most.”