Retailer ALDI has reported that its turnover in Ireland increased by a further 1.1% last year to €2.032 billion, up €24 million on 2021.
However, in the 12 months to December 2022, the company’s pre-tax profits dropped by 56% from over €39 million to €17.1 million.
ALDI said this reflects its “ongoing focus on balancing the considerations of colleagues, customers, over 330 Irish suppliers and the company”.
Inflation increased by 15% in 2022, which led to rising wages, higher energy costs, and rising input prices among suppliers, the financial results stated.
ALDI
This is the third successive set of annual results ALDI has published in Ireland, becoming the first supermarket to do so in 2021.
The retailer said that sales and customer numbers increased last year but its price shielding strategy and increased costs impacted margin.
ALDI noted that the changing habits of Irish grocery shoppers, accelerated by record inflation levels, are “here to stay”.
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.
Data from Kantar shows that there has been a 7% swing in favour of own-label products during 2022, which works in ALDI’s favour, as over 95% of its range is own label.
The company now has 160 stores across the country, with plans to develop more.
In 2022, six additional stores opened in Caherciveen, Clonakilty, Ballina, Tuam, Mountbellew and Ardee.
In September, ALDI announced new contracts with four suppliers, bringing the company’s spend with over 330 Irish suppliers to more than €1.1 billion annually.
The company also recently committed to the new 2024 Living Wage for its workers.
Profits
Commenting on the 2022 financial performance, Niall O’Connor, group managing director, ALDI Ireland, said the results reflect the company’s “steadfast commitment to staying true to its discounter DNA”.
“We signalled from the very start of the inflationary surge that we would work hard every day to provide the best value in the market for our customers.
“Just as our customers and suppliers faced rising costs day-to-day, so did we. Despite these rising costs, we 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 said.
Inflation
O’Connor said while the “overall inflationary peak of last year is receding, food inflation continues to be stubbornly high here at home and abroad”.
“We have demonstrated through price decreases on own brand products that where cost conditions improve, we will move quickly to cut prices,” he said.
Earlier this year, ALDI, along with other retailers, cut prices on staples like bread, milk and butter.
“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 said.