German supermarket group Rewe has posted higher sales, but lower profits in the first six months of its current financial year. Rising costs and fierce price competition are squeezing margins.
Margins under pressure
Turnover rose by 3.7 % to 43.97 billion euros, while operating profit fell by 4.2 % to 2.5 billion euros. Higher personnel costs and investments in a new loyalty program increased the cost base. At the same time, price competition – partly due to competitor Lidl – is putting additional pressure on results.
Performance varied widely across formats: supermarkets in Germany recorded 2.8 % of sales growth, while Toom DIY stores saw a 1.2 % decline.
International sales increased by 5.1 %, partly thanks to activities in the Netherlands via Lekkerland and Flink. However, the introduction of the ban on tobacco sales had a negative impact on sales.
