Aldi saw pandemic boost profits by 46% as it reveals accounts for first time

Aldi Ireland's profits rose 46 per cent last year to €71.2 million, as the discount supermarket chain revealed to The Irish Times its Irish financial performance for the first time since it entered the market 22 years ago.

The German-owned chain has also disclosed that its 149-strong Irish store network was 71 per cent more profitable in 2020 than its British stores, when measured as a proportion of sales. Aldi’s Irish stores posted a profit before tax margin of 3.6 per cent on revenues “just shy” of €2 billion last year, while its margin in Britain was 2.1 per cent, according to Aldi Ireland’s group managing director, Niall O’Connor.

He said the enhanced profitability of its Irish store network is down to greater competition in the British market, as well as the Irish operation being able to keep it costs relatively lower by “riding on the coat tails” of the British operation by using some of its back-office functions, such as IT.

149 shops

Mr O’Connor said all of Aldi’s Irish profits were being reinvested in a network expansion. Aldi says it plans to invest €320 million in 30 new shops over the next three years. The chain, which opened its 149th Irish shop this week in Newbridge, has previously indicated it intends to grow to about 200 shops in the Irish market. Mr O’Connor said it had already invested about €1.6 billion here since it entered the market.

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The 2020 financial results include the first 10 months of the pandemic, when grocery sales for all supermarket operators rocketed due to the closure of the hospitality sector in lockdowns, and people spending more time eating and drinking at home.

‘Outgunned’ in capital

Aldi Ireland’s sales rose 14 per cent last year from €1.74 billion in 2019, the last pre-pandemic year of trading, while figures from market research firm Kantar suggest the sector grew by almost 16 per cent.

Mr O'Connor said one of the reasons Aldi's sales had slightly lagged the average was that it was "outgunned" in the lucrative Dublin market, where it has just 24 stores but wants to build another 20. Larger operators, such as Dunnes Stores and Tesco, have far bigger networks in the capital and were better able to capitalise on the explosion in sales there during the pandemic.

Aldi Ireland has been forced to reveal its Irish performance for the first time because the British head office, with which it is closely integrated, is now outside the European Union following the expiration of the UK's Brexit transition.

This copy was corrected on Friday, November 19th as an earlier version stated Aldi Ireland’s pre-tax profits rose by 59% in 2020.