Lidl slumps to £25m loss after store expansion and hiring spree

Supermarket chain Lidl has revealed hefty losses for its UK business after investing heavily in stores and expanding its workforce.

The German-owned discounter said it slumped to a £25.2 million pre-tax loss for the year to February 29 2020, just before the pandemic struck.

It reported profits of £19 million the previous year, but said this was not a like-for-like comparison given an administrative reorganisation last March which saw previously separate divisions of Lidl UK combined into one business.

The losses came after Lidl spent £654 million adding another 51 stores and a new warehouse in Motherwell, Scotland, while it also increased its UK workforce by 8% to 23,249 as it hired nearly another 1,800 employees.

Since then, the group has continued its hiring spree to beef up its operations in the face of surging demand during the coronavirus crisis, taking on another 8,000 employees.

It also opened more than a further 50 new stores in the past year as it targets a network of 1,000 by 2023 under a £1.3 million investment programme.

Lidl now has more than 800 stores and 13 distribution centres across the UK and is on track to open a new £70 million headquarters in Tolworth, Surrey, by the end of the year.

Chief executive Christian Hartnagel said: “Whilst the world has changed considerably since this financial period (full year 2019-20), our driving focus remains on offering customers the best quality products at the lowest prices in the market.

“We will continue to focus on providing customers up and down the country with this, as we grow our store estate, logistics and operations.

“We are confident in our strategy and see huge potential in the market long-term and will continue to hire more colleagues, invest in British suppliers, open more stores and become an integral part of more communities.”

Lidl recently posted a record 17.9% surge in total sales year on year over the four weeks to December 27.

Supermarkets have reported soaring sales in recent months as repeated lockdowns have forced the closure of non-essential stores, pubs and restaurants while food retailers have been allowed to remain open.

Mr Hartnagel told the PA news agency that the retailer has also seen a rise in violence against its store workers since the start of the pandemic.

“All the grocers are in agreement that we need to do something as it is clear this has become more of an issue since Covid,” he said.

“The pandemic has been a pressure on a lot of people’s mental health, some people are on the edge and the face mask issue has added to this.

“You have people who are medically exempt not wearing them but also have some who choose not too, and this means staff have quite unpleasant conversations and things can be tense.

“Our staff have done an outstanding job throughout this.”

Lidl revealed plans earlier this week to pay more than 25,000 UK staff a bonus for their hard work amid the pandemic, while it has also pledged to repay more than £100 million in business rates relief.

The group, part of Europe’s largest retailer Schwarz Group, said in November that it would increase staff entry-level wages from March to £9.50 an hour outside the M25 and £10.85 within the M25.