The discount supermarket chain Lidl continues to face financial difficulties in Belgium, after failing to post a profit in the Belgian market.
According to internal figures obtained by newspaper De Standaard, Lidl Belgium recorded a loss of €31.1 million last year, slightly higher than the €29.1 million loss the previous year. The supermarket chain's German parent company had to inject additional capital to stabilise operations.
Despite its apparent popularity and reputation for aggressive pricing, Lidl is losing money. For every €100 in revenue, the chain loses €0.94. Total turnover, however, rose by 3% to €3.24 billion, reflecting modest growth despite the continued losses.
The company has made some cost-saving efforts, according to De Standaard. Operational expenses, including payroll, have decreased slightly relative to revenue.
Lidl is known for its attention to detail when opening new stores. Avoiding whitewashing ceilings alone can save €50,000 per location. The retailer also claims to keep construction costs relatively low. Nevertheless, these measures have not been enough to return to profitability.
Fierce competition in Belgian retail
As reported by The Standaard, Belgium’s retail sector has been under pressure for years. New entrants such as Albert Heijn and Jumbo in the north, and Intermarché in the south following its acquisition of Mestdagh, have intensified competition.
Delhaize has also strengthened its position by converting all stores to franchises and opening on Sundays. Lidl, which remains closed on Sundays, has increased promotions to retain customers.
Lidl continues to seek growth, gaining some market share alongside competitors such as Delhaize, Jumbo, and Albert Heijn, while Colruyt, Carrefour, and even Aldi have had to cede ground.
Expansion remains key
Expanding sales space remains central to Lidl’s strategy. Marjolein Frederickx, CEO of Lidl Belgium, stated in May that the company aims to add 80 new stores by 2038, in addition to the 302 existing locations. Recent growth has focused on enlarging and modernising stores, with six to eight openings per year. However, these investments have yet to produce profitability.
In the twelve months ending in March, Lidl posted an operational loss of nearly €12 million, a slight improvement of €1.5 million attributed entirely to a provision reversal. Three years ago, Lidl suffered a record operational loss of €62.8 million, equivalent to €2.18 lost for every €100 of revenue.
While losses have since been more than halved, combined with ongoing investments, they have weakened the company’s balance sheet. Last year, the parent company increased Lidl Belgium’s capital by €50 million, yet interest charges remain high, at around €20 million annually.
Aldi, the rival
Aldi, Lidl’s longstanding German rival, remains operationally strong in Belgium with a 5% operating margin, even if it has lost some market share. The company maintained stable revenue of €3.74 billion, along with steady operating and net profits, achieving a net margin of 4.1%.
Colruyt follows closely with a similar operating margin, focusing on maintaining high productivity, including pilot tests of smart shopping carts in Halle.
The Brussels Times reached out to Lidl Belgium for comment, but the company declined to provide additional statements. They did, however, confirm the accuracy of the reported figures published in De Staandard.
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