Aldi profits slide despite improved revenues

German discount grocer Aldi reported a sharp fall in profits as price cuts aimed at remaining competitive and its rapid UK expansion hit the bottom line.

Operating profits slumped 26% to £197.9m in the year due to significant investments made by the group. However, sales rose 11% year-on-year to £1.1bn as it picked up 800,000 new customers.

Aldi also said it will be investing a further £1bn over the next two years in stores and distribution centres as it aims to open a new store somewhere in the UK every week for the next two years.

"The reality is that almost 50% of the population of the UK doesn't currently shop with us and they tell us the main reason for that is that they don't have a store near us," said Aldi's chief executive in the UK and Ireland, Giles Hurley.

A new distribution site in Derbyshire was expected to open soon, with a further Bedford site also in the pipeline and Aldi was already experimenting with smaller convenience stores called "Aldi Local" in Greater London, including locations in Camden and Balham.