The cost of borrowing could hit Lidl’s ambitious UK expansion plans.
The German discount retailer saw its finances hit as interest expenses on its debts surged to a massive £108 million.
The supermarket has seen considerable success, along with its rival Audi, as customers struggle with the cost of living.
Bosses had planned on an expansion after a 20 percent growth rate, but it also has £3 billion in debts to be repaid over the next five years.
Lidl’s UK CEO, Ryan McDonnell, however, emphasized the expansion endeavors know no bounds.
Lidl isn’t alone in confronting escalating debt service charges.
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Both Asda and Morrisons shouldered substantial loans post-acquisition by private equity entities, resulting in a collective interest payment of £900 million last year, erasing their profits.
The heightened debt of Morrisons and Asda under private equity leadership significantly affects their competitive edge, opined retail expert Richard Hyman.
Industry analysts say leading players like Tesco and Sainsbury’s are in a more favorable position to weather the storm of increased borrowing expenses, courtesy of their shareholder equity, which provides an additional funding avenue.