Aldi Ireland profits fell 56% in 2022 as expansion continued
2 November 2023
Profits at Aldi Ireland more than halved to €17.1 million last year as the retailer invested in expanding its store network, and says it “shielded” customers from price increases despite an “increased cost base [which] impacted margin”.
Although sales rose 1.1% to €2.03 billion, up €24 million on 2021, Aldi’s pre-tax and operating profits both dropped 56%. According to Aldi, last year’s profit reduction reflected its “ongoing focus on balancing the considerations of colleagues, customers, over 330 Irish suppliers and the company”.
The retailer’s 2022 financial results are the third successive set of annual results Aldi has published in Ireland, becoming the first supermarket to do so in 2021.
During the trading period, inflation increased by an unpreceded 15%* in 2022, which is reflecting rising wages, higher energy costs, and rising input prices among suppliers.
Capital investment continues
Aldi’s footprint increased again in 2022 with six additional stores opened in Caherciveen, Clonakilty, Ballina, Tuam, Mountbellew and Ardee, while store refurbishments were completed in Dungloe, Blessington, Greystones, Killorglin and Elysian Cork. Its number of stores nationwide now stands at 160, with plans continuing to increase this further.
Changing shopping behaviours
Highlighting changing customer behaviours over the trading period, Aldi referenced independent analysis which identified a number of notable changes in consumer purchasing trends as shoppers sought to manage the challenges presented by inflation.
People are shopping around more regularly, but buying less, with more consumers choosing to purchase own-label brands rather than eliminating the product entirely from their shop. The retailer notes that there has been a 7%** swing in favour of own label products during 2022, which compliments the discounter, as over 95% of its range is own label.
Niall O’Connor, group managing director, Aldi Ireland said the results reflect Aldi’s steadfast commitment to staying true to its discounter DNA.
“2022 was the year that solidified the changing nature of how we shop,” said O’Connor. “Households, gripped by higher living costs, now buy more own label and smaller pack sizes, shop more often but buy less, and with an even greater emphasis on value. In this climate, Aldi’s ‘we won’t be beaten on price’ commitment continued to resonate, reflected in our rising sales and customer numbers in 2022.”
O’Coonor added that despite rising costs, Aldi “took the decision to continue to invest in our people, store expansion and sustainable stores refit programme, while mitigating the worst of the rises on our customers. We knew it was an approach that would impact our profitability, but over the medium-term, it will continue to prove the right one.”
He also noted that “the signs are encouraging” regarding inflationary trends.
“While the overall inflationary peak of last year is receding, food inflation continues to be stubbornly high here at home and abroad,” he said. “Factors such as supply chain complications and delays due to the war in Ukraine are indeed relevant. Notwithstanding, we have demonstrated through price decreases on own brand products that where cost conditions improve, we will move quickly to cut prices.
“Earlier this year we cut prices on family staples like bread, milk and butter. As schools returned in September, we cut prices further on a range of products. We will continue to monitor the backdrop and respond proactively as we enter what is typically a very busy Christmas shopping period for consumers.”
O’Connor also highlighted Aldi’s plans for continued expansion to support families “struggling with higher costs on multiple fronts”.
“In a community where an Aldi store opens, shoppers benefit from €78,000 each month in grocery savings while our suppliers benefit monthly to the tune of €1.7 million,” O’Connor claimed.
*(Source: Kantar, 12-week data, 25 December 2022 v 26 December 2021)
**(Source: Kantar, 4-week data, 22 January 2023 v 23 January 2022)