Schwarz Group released its financial year 2018/19 results, reporting a strong sales increase of 7.4% to €104.3bn. The growth was driven by Lidl and the group’s international operations. Lidl’s turnover increased by 8.8% to €81.2bn while Kaufland’s sales grew by 1.6% to €22.6bn. Tönsmeier Group, the waste disposal company acquired in 2018, generated sales of €500m.
According to Schwarz Group’s CEO, Klaus Gehrig, sales were driven by ‘new stores’ openings and attractive prices’. The group now operates more than 12,100 stores across 30 countries, thanks to 400 stores opening in 2018, of which, most were under the Lidl banner.
Lidl’s good performance in Germany
Lidl’s sales increased by 5.9% to €22.7bn in its home market. Despite a more competitive environment, especially in terms of consumer’s prices, Lidl’s posted a stronger growth than the previous financial year (+5.2% in 2017/18). The discounter’s investment in remodelling its existing stores, in private labels and the fast expansion of online sales contributed to these overall good results in Germany.
Kaufland’s growth slows
Kaufland posted a growth of only 1.6% in FY2018/19, -1.4pts compare to the 2017/18 growth. The retailer has been affected by a challenging environment for hypermarkets in the markets where it operates. But the group is currently investing in its stores to improve the shopping experience and in its categories to offer more solutions.
Lidl’s international operations driving the group’s growth
Outside of Germany, Schwarz Group sales increased by 9.1% to €67.3bn. In October 2018, the group entered Serbia where it opened 23 Lidl stores. In the US, Lidl acquired 27 Best Market in November 2018 as it looks to build its presence in the market. Lidl sales remained strong in Spain (+11.5% to €4bn), while in Italy it opened its highest number of stores for many years, adding more than 40.
2019: investments to continue and focus on digital
In 2018, Schwarz Group invested €7.5bn, mainly in store upgrades and openings. The group anticipates a similar level of investment for 2019, with strong development plans for Lidl across Europe.
Digital is becoming a focus for the group. Lidl now offers online food or non-grocery in a growing number of countries. In 2018 its online sales grew by 56% globally. Lidl also continues the roll out of its loyalty app, Lidl Plus.
Keep up-to-date with the latest developments of international retailers, sign up for our newsletter. For subscribers wanting to know more about Schwarz Group, please have a look at our Lidl and Kaufland Strategic Outlook for 2019.
If you need some support when building your strategy for discounters and more broadly for international retailers, please get in touch with Milos Ryba, Head of Retail Strategic projects, [email protected].
Senior Retail Analyst - Discount
If you have a specific business challenge or training requirement we can put together something just for you.
As Lidl continues its rapid expansion across Europe and the US, it is looking to build stronger relationship with its shoppers. As Lidl invests in its stores and expands the ranges and services it offers, identify your opportunities with the retailer as we explore the latest strategic priorities that will influence its future performance.