Aldi reports record sales but profits drop amid price war

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Aldi has reported record sales in the UK and Ireland for last year but its profits have fallen sharply amid a fierce price war among supermarkets.

The German discounter said sales rose 13.5% to £8.7bn in 2016, but operating profit dropped 17%.

The chain blamed the fall on its “continued investment in prices and infrastructure”.

Aldi chief executive Matthew Barnes said its strategy was to offer “the lowest prices in Britain”.

“We’re doing everything we can to insulate customers from those cost increases, making sure our prices are the lowest in the UK, every day of the year,” he said.

Aldi, which currently has 726 stores in the UK, said it planned to open a further 70 this year and would invest a further £459m.

The German chain currently has a 6.9% share of the market, according to the latest industry figures from Kantar Worldpanel.

This figure makes it the fifth-biggest supermarket in the UK after Tesco, Asda, Sainsbury’s and Morrisons.

Analysis: Emma Simpson, BBC business correspondent

Aldi only has around 1,700 products, compared to the 20-30,000 items you find in a typical big supermarket.

And 94% of these are private label. Not being beholden to big brands enables it to buy products more cheaply – passing on the savings to customers while still making decent margins.

Opponents vent against Aldi’s own label products where the packaging looks incredibly similar to the big household brands, and supermarkets have complained about its advertising tactics. But that hasn’t put off shoppers.

Boss Matthew Barnes is adamant that Aldi will always be cheaper.

That’s one reason why its profits fell for the second year in a row.

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