December 7, 2012

Lidl hits the debt brake

Klaus Gehrig, CEO Schwarz Group (photo: Lidl)
Klaus Gehrig: The Schwarz Group frontman wants to put a lid on Lidl's indebtedness (photo: Lidl)
The Swabians are canny people when it comes to money and have been justly compared to the Scots.

Hard discounter Lidl wants to reduce its indebtedness to banks. This is partly a cautious reaction by parent company Schwarz Group to the current crisis in the eurozone.

However, Lidl clearly also believes that future capex requirements will be lower than in former boom years.

Since 2007/08 (February 29), balance sheet debt has jumped by around €2.5bn to €10.1bn (not including France) on net annual revenues of €45bn.

This follows an explosion of overall indebtedness from 2002 to 2009 in the wake of aggressive foreign expansion. The vast European empire of the Neckarsulm-based group currently spans 28 countries.

The entry of sometimes three new foreign markets a year required an annual capex of up to €3.5bn. Who can wonder that plans to enter new markets have now been scaled back?

Serbia next

A move into Serbia will follow soon, but such a small country is not likely to demand substantial investment.

In fairness, any review of corporate indebtedness must also take into account that real-estate valuations and cash-flow have increased substantially. Furthermore, our newspaper estimates that Lidl's like-for-like revenues have increased by 3 per cent this year.

Apparently, Schwarz Group boss Klaus Gehrig also believes that interest rates are set to rise on capital markets.

Häusli baue

Overall, there seems to be a clear shift in strategic priorities. The days of low-interest, credit-fuelled expansion are now deemed over. Instead, the emphasis is on raising productivity at Lidl's 10,000-odd outlets by modernising stores and continuing the roll-out of bakery units.

This is not without an element of humour. Swabians are not only known in Germany for their thriftiness and diligence, but also for their penchant for housebuilding (Schaffe, schaffe, Häusli baue).

Perhaps soon we shall be treated to the spectacle of Klaus Gehrig mixing cement on site or sweeping the leaves off the premises?

Podcast microphone (photo: Gerhard Seybert-Fotolia)
(photo: Gerhard Seybert-Fotolia)

Podcast. Click arrow to listen to an audio version of the text:

Lebensmittel Zeitung print and digital (photo: LZ)
photo: LZ
Our German B2B newspaper, Lebensmittel Zeitung, in print & digital
Read in German: by retail news editor Jan Mende in 
Lebensmittel Zeitung, no. 49, 07.12.2012 


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Comments for this article are closed.

  1. Ian Carrigan
    Created 16 June, 2015 05:56 | Permanent link

    Lidl in Australia

    Does anyone have a contact for Lidl in Australia? Please email me.

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