Lidl store Hersham

Source: Lidl

Lidl is keen to get new stores up and running as soon as possible

Lidl has decided not to wait for investors to restart its pipeline of new stores and has instead found the money to start building them itself.

As reported by The Grocer in February, the discounter was pitching for investors to pay £91m for the construction of 12 stores in return for the freeholds. Lidl’s plan was to then lease the stores back.

The investment pitch was a way for Lidl to get estate expansion back on track, having cut its own construction budget last year, a move thought linked to the burden of high interest rates on its parent the Schwarz Group.

However, in an indication of confidence in its recent performance, Lidl has now appointed contractors to build what a source called “numerous” stores, including sites that were in its portfolio pitch to investors.

Lidl has been the fastest-growing supermarket for six months in a row, according to Kantar. It was the only one in double-digit year on year growth in the latest 12-week period, to 18 February, with sales up 10.9%, compared with runners-up Sainsbury’s, Tesco and Aldi on 7.6%, 6.2% and 5.7% respectively. 

Read more: Aldi publishes ‘wish list’ of London locations for new stores

While Lidl is still seeking funding from investors for several stores, it is understood it is keen to get new branches up and trading as soon as possible, and so has decided to appoint contractors in the meantime.

The stores include one in Hull, which was among the 12 pitched to investors, but which Lidl has now appointed Stainforth Construction to build.

It is also understood from property sources that investors baulked at the pricing in Lidl’s pitch, with an initial net yield of 4.25%.

“Lots of people were aware of it but the overall comment was their pricing aspirations were too keen,” said a source.

“They may have decided to get building on the sites and see what happens as the market improves in six months’ time.”

Lidl cut its usual annual pipeline of more than 50 new stores to 25 last year, saying it wanted focus investment on growing warehouse capacity instead.