June 25, 2022


The financial performance of Irish supermarkets has long been a mystery to all but industry insiders. Their profits are guarded like the contents of the Vatican archives – often speculated upon, reportedly legendary, but few know for sure what they really are.

Tesco reveals its Irish sales, but not its profits. Musgrave, which owns SuperValu, reveals the chain’s gross sales including those of franchisees. But it only reports the profits of Musgrave group, bundled up with all its other brands and its wholesale division. And that is about the extent of it. The detail of the once-in-a-generation boost to the bottom lines of Irish supermarkets from the lockdowns of 2020 remains unknown.

Lidl’s Irish sales and profits are contained within the results of a German-registered company. Financial information on Marks & Spencer’s Irish grocery operation is as spotty as its post-Brexit stock. Meanwhile, the performance of the family-owned Dunnes Stores group, one of the most secretive companies in the State, has long been concealed behind a bewildering array of unlimited entities.

You can thank Aldi for the fact that prices have risen so little over the last 20 years. We brought manners to the market

Aldi, the German discounter with a 12.7 per cent share of the market, has always wrapped the financial performance of its Irish operation into its British unit as an accounting job lot. Until now.

In an interview with The Irish Times, the group managing director of Aldi Ireland, Niall O’Connor, reveals for the first time its Irish revenues and profits over recent years, including the blistering first 10 months of the Covid era. They show a near 60 per cent rise in its Irish profits for 2020. Its outlets here also were more than 70 per cent more profitable than Aldi’s stores in Britain, when measured as a proportion of sales.

“All of those profits are going back in to the business,” says O’Connor, as he confirmed Aldi will invest €320 million in 30 new stores over the next three years, on top of €1.6 billion it has invested since it entered the market more than 20 years ago. The company says it will also break the €1 billion barrier this year in purchases from Irish suppliers, as it reorients its supply lines after Brexit.

O’Connor says that Aldi, which operates 149 stores in the Irish market and employs 4,600 staff, posted sales “just shy” of €2 billion in 2020. This was up 14 per cent on 2019, the last pre-pandemic year of normal trading for the sector.

It recorded pretax profits of €71.2 million, up from €44.8 million in 2019. It paid corporation tax of €10.9 million, hired about 480 new workers in 2020 and its payroll rose 14 per cent to €149 million.

Its 2020 pretax profit margin of 3.6 per cent compares to 2.1 per cent for Aldi in Britain, O’Connor says.

“Profits have always been the subject of curiosity in the Irish market,” he says. “The increase in sales [from the pandemic] is what really drove profitability. In the year that was in it, yes it is correct – we were [more profitable in Ireland than Aldi in the UK]. But I would caveat that by saying the UK is a different market with more players.”

O’Connor argues the heightened profitability of Aldi’s Irish stores compared to those in Britain is not just a function of increased competition in the UK market. He says Aldi is also able to cut costs here by “riding on the coat tails” of the British operation by utilising its back office functions, such as technology.

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“It doesn’t make any sense for us to have, for example, our main IT team in Ireland. We’d be just duplicating what we have in the UK. So we try to have a skeleton team here. That allows us to benefit from the economies of scale of the UK business, and we don’t have to take on all those extra costs. That feeds back in to our business and it is better for our customers.”

Financial sunlight

It is Aldi Ireland’s inextricable links with the British head office that have pushed it into the financial sunlight to break out its Irish performance for the first time. O’Connor says that a legislative amendment means companies in Ireland whose effective head office is registered outside of the European Union must now reveal their Irish results. Aldi’s Irish headquarters is registered in Britain. Following the end of Britain’s Brexit transition period, the rule applies to the German supermarket chain.

“I don’t think we will be the only one [to release figures], although I’m not sure everyone will. It depends on how their business is structured. The rumour is Tesco will and M&S will. It is great for the consumer.”

Overseas chains, in particular, were in years past suspected of squeezing higher profits out of supine Irish customers compared to their operations in the UK. The numbers suggest the extent of this may be diminished these days. Locally-owned Musgrave reported a profit margin for 2020 of 2.1 per cent for the group. Aldi’s 3.6 per cent profit margin is up from 2.8 per cent in 2019, but it is still a modest return compared to some other sectors. How does it compare to its other grocery rivals?