Age of food discounter over as Aldi racks up £54m loss

The disastrous performance, revealed in documents obtained by Retail Week, reflects a difficult year for the discount retailer, during which it parted company with two managing directors, Paul Foley and Armin Burger.

Despite its moment of fame in the recession, Aldi’s struggles show how the continental hard discounters have found it difficult to make real inroads against the might of the UK’s big four.

While they have prospered in mainland Europe, the sophisticated value offers and better store environments of Tesco and Asda have made it harder to make progress.

The figures, for the 12 months to 31 December last year, show sales grew 1.7% to just over £2bn despite opening 45 new stores

during the period and extending others. £29m of the loss of £54.2m was attributable to losses incurred on a disposal programme of older stores and redundant assets.

Aldi blamed the loss on investment it had made in the business during the year.

“We have invested significantly in upgrading all our existing stores and this has had an impact on the 2009 result,” joint managing directors Matthew Barnes and Roman Heini said in a statement. “We are confident that our continuing investment programme will lead to increased turnover and profitability.”

Barnes and Heini were parachuted in from other parts of the Aldi empire to stem the decline in the business, which enjoyed a stellar year in 2008 as middle class shoppers flocked to its stores as the banking crisis took hold.

Aldi had planned to expand from more than 400 stores to 1,500 and its success even prompted Tesco to launch a Discounter range and rebrand itself Britain’s Biggest Discounter in September 2008.

Aldi declined to provide details of trading so far this year, but the latest Kantar grocery data for the 12 weeks to September 5 showed it had a market share of 2.9%, down from 3% in the same period last year.

Its discount rivals haven’t found the going plain sailing either. Netto is selling its UK business to Asda, having failed to make a mark in the UK, while Lidl is on its third UK managing director in less than 18 months.