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Aldi’s UK holiday sales top £1 billion for the first time

Aldi’s holiday sales in the United Kingdom topped £1 billion ($1.3 billion) for the first time in 2019, after the discount retailer added dozens of new stores and shoppers feasted on booze and meat deals.

The UK division of the German retailer said in a statement Monday that sales for the four weeks to December 24 increased 7.9% compared to the same period the previous year.

The privately-owned chain did not disclose same-store sales, a common measure of retail performance, but said it opened 53 stores during 2019. Aldi also said it upped its share of UK grocery market sales to 8%.

After stripping out new stores, sales growth for the holiday period was probably closer to 3%, according to Thomas Brereton, a retail analyst at analytics firm Global Data.

Aldi opened its first UK store in 1990 and is now the country’s fifth biggest grocery chain. It currently has 874 UK locations and said it remains on track to achieve its target of 1,200 stores by 2025.

The company has deployed its trademark low-cost business model to entice customers away from bigger UK chains, including Tesco and Sainsbury’s.

Aldi’s rapid expansion saw it invest £531 million ($698 million) in opening 71 new stores in the United Kingdom and Ireland in 2018. Sales that year increased 11% to £11.3 billion ($14.9 billion) but the investment weighed on profits, which declined 20% to £138 million ($181 million).

But Brereton said that the 2019 holiday sales showed that that Aldi must “face the fact that it can no longer hope to achieve the same domineering double-digit growth it has done over the past decade.”

Read: How a brutally efficient grocery chain is upending America’s supermarkets

The chain has also made an aggressive push into the US market, where it plans to have 2,500 stores by 2022. That would make it the third largest grocery chain in America behind Walmart and Kroger.

Demand for booze, premium products and meat drove December sales in the United Kingdom, Aldi said. Beer, wine and spirits sales increased 9.2% over last year, while premium products and British meat each grew 8%.

Aldi’s UK focus for this year and next appears to be on expanding its underrepresented presence in London, largely through the Aldi Local format, Brereton said.

It will face competition in the British capital from online retailers, such as Ocado, that it has not been up against before, he told CNN Business.

Rival German chain Lidl is due to publish holiday season sales for the United Kingdom on Friday, and is expected to show better performance than Aldi, Brereton said.

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