April 22, 2016
Schwarz Group is Europe's Mr Big Spender
![Shirley Bassey (photo: By Nyctc7 (Own work) [Public domain], via Wikimedia Commons) Shirley Bassey (photo: By Nyctc7 (Own work) [Public domain], via Wikimedia Commons)](/news/media/1/jpeg-2153-detail.jpeg)
Will Shirley Bassey now shop at Lidl?
(photo: By Nyctc7 (Own work) [Public domain], via Wikimedia Commons)
This impressive sum was essentially used to upgrade and expand the store base in Germany and Europe. That was considerably more cash than the annual investment of major rivals Edeka, Rewe and Metro Group put together. It also easily beats that of other national market leaders in Europe such as Carrefour in France, Ahold in the Netherlands, Migros in Switzerland or Tesco in the UK.
Admittedly, the capital expenditure (capex) of US giant Walmart was more than twice as high last year (€10.2bn). But, if you put capex in relation to net revenues for both companies, then our slide rule gives Schwarz Group 6.3 per cent against only 2.4 per cent for Walmart. In fact, our thrifty Swabians topped the international league of all the grocery multiples we reviewed (cf. chart below).
Capex as a Percentage of Net Revenues
Schwarz Group (D): 6.3%Migros (CH): 4.9%
Edeka Group (D): 3.4%
Rewe (D): 3.1%
Ahold (NL): 3.1%
Carrefour (F): 2.8%
Walmart (USA): 2.4%
Metro Group (D): 2.4%
Tesco (GB): 2.1%
This startling trajectory is set to continue. Insiders estimate that Schwarz Group will up capex by a further €1bn in its current business year to the end of February 2017. This means that the retail giant, which posted net sales of more than €79bn last year, will have doubled annual investment to €6bn in only three years.
As the company is also on the verge of expanding into the United States in early 2018, it is exceedingly unlikely that capex levels will be declining any time soon.

Demanding: Lidl's strategy of trading up from a no-frills discounter to a price-aggressive supermarket operator has substantially increased capex requirements
(photo: Lidl)
Probably there is no better indicator of the relative health of a company than the level and progression of its capex. At the very least, it reflects management's strong belief in the future.

Lidl's XXL brother: A Kaufland compact hypermarket
(photo: Kaufland)
So not all retailers are in the happy situation of Schwarz Group where they can upgrade and expand their store base at the same time.
Sounds like a healthy company? Maybe it's one Shirley should spend some time with...

(photo: Gerhard Seybert-Fotolia)
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