Lidl, the German discount supermarket, has reported a pre-tax loss of £75.9m for its British business last year, a sharp decline from the previous year's profits of £41.1m. Despite a rise in sales of 18.8% to £9.3bn, the company attributed its losses to the challenging inflationary environment, which led to a significant increase in costs across the board. Lidl said it had opened over 50 shops in a year and increased its market share among its rivals, but the expansion plans and rising costs impacted its bottom line.
Ryan McDonnell, Lidl's chief executive for Great Britain, acknowledged that the entire retail industry had been hit by inflation, and Lidl was no exception. However, he emphasized the importance of keeping the supermarket's price promises and its price gap in relation to its competitors. McDonnell expressed confidence in the company's business model and saw potential for hundreds more Lidl supermarkets across the country, stating that the momentum on the back of all the investment was really encouraging.
Further losses for John Lewis
John Lewis, along with Lidl, has reported further losses to its business for the first half of 2023. The department store's pre-tax losses narrowed to £59m for the first half of 2023, from a £99m loss a year earlier. However, the company's plan to return "sustainable" profit would take two years longer than expected, with its target now 2028. This is due to rising business costs and larger than expected investment requirements.
John Lewis has been facing tough competition in recent years on the High Street, resulting in a series of store closures. Its supermarket chain Waitrose has also underperformed. For the first half of this year, Waitrose saw the value of sales rise by 4%, but the supermarket said this was driven by prices for its goods jumping 9% and the actual amount of products sold had actually fallen.
The company's modernisation plans would "take precedence" over its staff bonus. In March this year, John Lewis said it would not pay a staff bonus for only the second time since the scheme began in 1953, after a "very tough" 2022.
Customers at John Lewis department stores were spending "more on themselves", the company said, with its sales in its beauty and fashion departments up. This was partly driven by new brands including JoJo Maman Bébé and Le Specs. However, the group said shoppers were being "more cautious" over buying technology products and so-called big ticket items for their homes.
The company's chairwoman, Dame Sharon White, told the BBC's Today programme that she was "very encouraged" by the group's latest results, with losses narrowing ahead of the peak Christmas trading period. She said the "transformation for the partnership will take time", but said the group's customers were showing a "vote of confidence" in its brands.
In May, John Lewis employees backed Dame Sharon in a vote of confidence after she ruled out selling a stake in the business following speculation that a change to John Lewis's employee-owned structure was being considered.