Aldi stock has become a great success with over 22,000 stores. It is one of the fastest-growing United States grocers. Aldi currently handles more than 2000 stores across 36 states and plans to expand by opening 2500 new stores in different locations by 2022. Aldi has shown magnificent growth since its first store that opened in Iowa in the year 1976. As estimated by the Food Industry, Aldi is currently the ninth-largest grocer present in the US. In fact, as per the estimation of the Food Industry, Aldi has gone beyond Amazon’s popular whole foods market that was the tenth largest grocer in the US in early 2021.
Is Aldi Publicly Traded?
No, Aldi is not publicly listed on any stock exchange in the USA market or German stock exchange. Aldi is Germany’s leading grocery store and privately owned company by brothers Theo and Karl Albrecht.
There is no provision for buying shares in Aldi even though Aldi is the fastest-growing grocer in the United States. It is a family-operated business that is self-sufficient and does not require outside capital for operating. Aldi’s stock is calculated to be valued at over $50 billion and is owned entirely by the Albrecht family.
Aldi is a grocery chain famous for its affordable prices and efficiency all across the world. The stores opened by Aldi are usually small and house a small team of staff to cut down on the expenses. Aldi also uses a vending machine that customers can use by paying for shopping carts. Customers are required to pay 25¢ for the cart from which a quarter can be refunded on returning the cart. The strategy behind taking payment for the carts from customers is to eliminate paying an employee to bring back the carts from parking lots. Aldi also saves money by charging the customers for paper and plastic bags. It helps in eliminating unnecessary costs since the customers are encouraged to bring bags from home. Charging for carts and paper bags is a common practice all over Europe’s supermarkets. Another reason behind the low prices at Aldi is that most of their products are private label brands. Therefore, it allows them to price their products lower than others by knocking out name brands.
Aldi Stock Price
There is no Aldi stock symbol since the company is not listed in the US or Germany (its founding country) on any stock exchange. However, the revenue of Aldi, as estimated by the Food Industry, stands at around $15 billion, making people want to invest in the company.
Who Is the Owner of Aldi?
Aldi is a US company privately owned by the Albrecht family. The name Aldi comes from Albrecht Diskont that stands for Albrecht discount. Two Aldi discount grocery chains are running in Germany – Aldi Sud and Aldi Nord. Aldi Sud owns Aldi USA, and Aldi Nord in the United States owns Trader Joe’s discount market chain. Together these Aldi brands have ownership of more than 10000 stores across the globe. Stepping outside Germany, the largest market of Aldi is present in the United States and the United Kingdom. In the United Kingdom, the Aldi supermarket chain has surpassed the Tesco brand. It is a huge success that hasn’t been accomplished even by Walmart.
Aldi Initial Public Offering
Aldi is a private company with little interest in offering an Initial Public Offering (IPO). Aldi is famous as one of the largest private retailers in the world, and no IPO can be expected under its current ownership. However, the investors will timely anticipate the possibility of an IPO at Aldi because of its extraordinary profitability and competitive advantage.
Are Lidl and Aldi owners brothers?
No, Lidl and Aldi are separated companies and top competitors. Aldi is owned by brothers Theo and Karl Albrecht, while Dieter Schwarz’s Schwarz Group owns lidl.
What Are the Reasons Behind Aldi’s Low Operating Cost?
Aldi stores private label brands and eliminates the name brands that help in keeping the costs lower. Further, Aldi has smaller stores and keeps less stock in the store as compared to other supermarkets.
An average Aldi store occupies a space of 17000 square feet while the Kroger supermarket stores occupy an area of 100000 to 150000 square feet. The small store size requires less staff, thereby reducing costs. Aldi also stocks fewer goods at the store. An Aldi store sells about 1400 grocery and other products while the Kroger marketplace generally sells 225000 products at a store. Stocking lesser products is beneficial in simplifying the operation and logistics. It also enhances the shopping experience, making it fast and hassle-free compared to big stores selling many products.
However, Aldi is known to offer high-quality products to its customers irrespective of the low prices. These products do not have any synthetic colors, added MSG, and partly hydrogenated oils. The private label products of Aldi have been given more than 400 awards for their excellent quality. It also sells several organic products, and the test kitchen has more than 30000 taste tests every year. Besides the groceries, Aldi also offers other products via the Aldi Finds discount program. The high discounts offered by Aldi scares the management team of brands like Walmart and other chains.
Already establishing a footprint in the Midwest, Aldi has recently entered the Californian market as well. Aldi has attracted several followers to its chain because of top-quality services at minimal prices. The Facebook group of Aldi, United States, with the AldiNerd.com Community, has more than 1.3 million members. Any new store opening by Aldi attracts huge crowds simply by the reputation it carries across the globe. Aldi also provides delivery service to customers in several US markets via Instacart. This collaboration further aids Aldi in reducing the cost because Instacart’s workers are solely responsible for picking, packing, and delivering the groceries in their vehicles.
The Best Ways for Investing in Aldi’s Competitors
Even though Aldi does not allow external shareholding, several other competitors you can invest your money in to earn handsome profits.
1. Kroger Stock: One of the largest grocers in America, Kroger offers shares to the public with enormous value. Warren Buffett is one firm believer of Kroger’s deal. As estimated by CNBC, Berkshire Hathaway (BRK.B0) was the owner of 24.978 million shares of Kroger as of 30 September 2020. According to Buffett, Kroger is a valuable investment since it is cheap and yet enormous. As estimated by Statista, Kroger manages 2757 grocery stores in the district of Columbia and 35 states of America. Besides this, Kroger also owns 45 distribution centers, 170 jewelry stores, 35 production plants, and about 1585 supermarket fuel centers.
In the future, Kroger, along with Ocado Group PLC, has planned to make 10 Customer Fulfillment Centers (CFC) in the USA. These CFCs will be automated warehouses in which the grocery orders will be pulled and packed to be directly delivered to the customers via robots. For providing the orders to the customers, they will use external delivery services of contractors like Instacart. Supermarket News reports that Ocado and Kroger are planning to build these CFCs in several locations across America’s metropolitan areas such as Chicago, Atlanta, Dallas, and Washington DC.
Kroger is the owner of multiple supermarket chains of America such as Fry’s, Ralphs, Smith’s, King Soopers, Harris Teeter, Fred Meyer, Dillons, City Market, and Baker’s. Besides this, Kroger also manages about a hundred supermarkets under their name. In addition, Kroger is also the owner of Vitacost Vitamin Brand, Home Chef meal service, and Little Clinicmedical centers.
The profits earned by Kroger were reported to be $6.822 billion quarterly, with a revenue of $29.732 and a quarterly operating income of $792 million as of 31 October 2020. The revenue earned by Kroger sometimes exceeds this estimation. The quarterly revenue reported on 30 April 2020 was $41. 549 billion.
Kroger is a constantly growing company. As per the estimation by Stock Rover, Kroger Revenue increased by 6.25% in the quarter ending on 31 October 2020, 8.24% in the quarter ending on 31 July 2020, and 11.54% in the quarter ending on 30 April 2020.
Kroger supermarket generates a large amount of cash. The quarterly operating cash flow reported on 30 April 2020 was $4. 245 billion, on 31 July 2020 was $1.116 billion, and on 31 October 2020 was $492 million. The quarterly ending cash flow reported on 30 April 2020 was $2.726 billion, 31 July 2020 was $94 million, and 31 October 2020 was -$640 million. It fell because Kroger was investing in the business while paying off debts. As reported on 31 October 2020, Kroger’s investing cash flow was -$700 million, and the quarterly financing cash flow was -$432 million. Further, the long-term debt of Kroger on 31 January 2020 was $12.111 billion and fell to $11.925 on 31 October 2020. The cash and short-term investments of Kroger amounted to $1.578 billion as of 31 January 2020 and grew to $3.282 billion on 31 October 2020.
Besides this, the value of Kroger has also been growing. As of 31 January 2020, the company reported the value of total assets as $45.256 billion that grew to $48.465 billion as of 31 October 2020. The quarterly dividend to be paid by Kroger on 1 March 2021 is 18? which evolved from the prior quarter dividend of 16? on 14 May 2020. Broadly calculating, the forward annualized dividend offered by Kroger amounted to 72?, and the forward dividend yield as of 5 February 2020 was 2.15%.
Therefore, Investment in Kroger shares is an excellent Aldi alternative because it is growing and using the latest technology to keep the company leading. Additionally, Kroger’s stock is a cheap dividend stock and a good Warren Buffett investment.
2. Walmart Stock: Operating more than 11500 stores under 55 banners in 26 countries, Walmart is one of the leading retailers in the world. It is the largest retailer in North America, boasting 4748 stores and 599 Sam’s Club stores in the US. As estimated by Stock Rover, Walmart, with its $288 billion grocery sale in 2019, is the largest grocer in America by volume. Therefore, several people take investing in Walmart as a value investment. The quarterly revenue reported by Walmart was $134.708 billion as of 31 October 2020. The quarterly gross profit was $36.359 billion, and the quarterly operating income was reported as $5.778 billion.
As reported by Stock Rover, Walmart continues to be a growing company with its 5.25% revenue growth rate in the quarter ending 31 October 2020. Besides this, Walmart also brings out a good amount of cash. As a result, the quarterly operating cash flow was reported as $11.939 billion on 31 July 2020. And, on 31 October 2020, the quarterly operating cash flow saw a fall to $3.924 billion. Further, $14.985 was the figure of quarterly ending cash flow at Walmart on 3 April 2020. However, it fell to $1.969 billion on 31 July 2020 and further to -$2.576 on 31 October 2020. The reason behind the fall of Walmart’s ending cash flow was that it was paying off the debts. As a result, the negative quarterly financing cash flow was reported as -$8.379 billion on 31 July 2020 and -$3.526 on 31 October 2020.
There was a long-term debt payable by Walmart amounting to $45.599 billion on 31 October 2020. It further fell from $ 48.021 billion on 31 January 2020. Investing at Walmart is considered a worthy investment because the value of its total assets recorded on 31 October 2020 was $250.863 billion that grew from $236.495 billion reported on 31 January 2020.
Walmart is also capable of accumulating large sums of cash. On 31 October 2020, the total currency and short-term investments were valued at $14.325 billion, growing from $9.465 billion reported on 31 January 2020. Walmart is known to be a worthy investment owing to its enormous assets and cheap stock rate.
Further, the e-commerce sales at Walmart are on the rise, promising a bright future. The e-commerce sales saw an increase of 79% in the quarter ending 31 October 2020. As estimated by Digital Commerce 360, Walmart occupies the position of the third-largest online retailer in America. Walmart is efficiently using its resources by recording online orders at its 2500+ stores, as claimed by the CEO Doug McMillion. Further, for expanding e-commerce, Walmart is exploiting its resources to open up eCommerce Distribution Centers (eDCs) in the Regional Distribution Centers. The eDCs fill the online orders placed at Walmart.com to be delivered in 2-3 business days.
Another attractive feature of Walmart is its 7.5% stake in TikTok Global, an American company operating the renowned video streaming app TikTok in northern America. As reported by CNBC, McMillion, the CEO of Walmart, will also serve on the Global Board of TikTok.
Additionally, as reported by Fashion Week, Walmart is also live streaming advertisements for some renowned products on TikTok that reach over 100 million Americans. The first shoppable live stream on TikTok was tested by Walmart on 18 December 2020. Walmart can add more value by being the no. 1 merchant on TikTok, becoming the pioneer of TikTok retail. TikTok can be a great marketing source since it is among the most famous and rapidly growing social media applications. Therefore, Walmart is the future company with an excellent social media presence and a robust e-commerce network making it an outstanding dividend stock. The quarterly dividend paid by Walmart as of 19 February 2020 was 53? that grew to 54? on 18 February 2021.
The cheap stocks and good dividends of Walmart make it a valuable investment. Further, it has bright prospects for the future with social media support and an e-commerce network.
3. Costco Wholesale stock: Best known for the unique business model, the club store Costco (COST) is among the best discounters in the United States. One can shop at Costco by purchasing their annual membership costing $60 or $120. As estimated by Statista, in 2020, it was estimated that over 105.5 million people had Costco membership owing to the brand’s good reputation for low costs and high quality. In addition, Costco is overgrowing; its members increased from 98.5 million to 105.5 million from the year 2019 to 2020. Like Aldi, Costco also operates no-frills stores where they sell the best quality groceries at affordable prices. However, as against the small-sized stores of Aldi, Costco’s club stores are enormous, generally covering an area of 144500 square feet.
The no-frills business model at Costco does not include advertising. Instead, Costco sends advertisements directly to its customers instead of advertising on television or in newspapers. Since the customer base of Costco is loyal, this strategy works very well. As a result, the overall business model of Costco is attractive. It reported quarterly revenue of $43.208 billion, a quarterly operating income of $1.43 billion, and an utterly gross profit worth $5.75 billion as of 30 November 2020. As reported by Stock Rover, the revenue growth rate of Costco saw a rise of 16.65% in the quarter ending 30 November 2020. In addition, Costco generates large sums of money. The quarterly operating cash flow was reported as $2.647 billion, and the ending cash flow was reported as $13.59 billion as of 30 November 2020.
Further, Costco also promises enormous value to the stockholders. The cash of Costco amounted to $14.423 billion, and short-term investments and total assets were valued at $60.317 billion on 30 November 2020. Another reason behind Costco being a lucrative investment is that it has a small amount of debt. It reported a long-term debt worth $7.529 billion as of 30 November 2020.
Besides this, Costco offers excellent dividends to the stakeholders. The quarterly dividend paid by Costco amounted to 70? on 4 February 2021. The quarterly dividend witnessed an increase from 65? on 6 February 2020. Along with this, one can expect substantial bonus dividends as well. The bonus dividends paid on 1 December 2020 by Costco were $10. As estimated by Dividend.com, the forward annualized dividend offered by Costco was $2.80, and the dividend yield of 0.79% as of 5 February 2021.
Therefore, Costco is a lucrative investment promising good growth and income stock. However, the financial numbers displayed by Costco do not do much justice to their share price.
Which Company Will Rule the Future of American Retail?
The future of American retail is in the hands of companies like Costco and Aldi. Their success in the market portrays that consumers appreciate a simple shopping experience with low prices and high-quality products. As a result, both these brands attract numerous consumers by offering low prices and simplifying the shopping experience.
The difference between the two brands is that Aldi operates in small-sized stores with minimal staff employed; however, Costco operates vast stores. Aldi also operates stores in small towns and cities, under-served areas, and inner-city neighborhoods to reach customers everywhere. Aldi, therefore, serves even tiny regions, which the large retailers generally ignore. Besides this, one solid customer base of Aldi includes senior citizens with limited and fixed income. There are several products available on Aldi Finds that cater specifically to older customers.
Since Aldi is an accessible retail store for people across age groups and incomes, it holds the future of American retail because of America’s rise in income inequality. Moreover, Aldi stores are present even in the Rust Belt region, a decaying town that once was the leading industrial town of America.
Even though Aldi does not raise public funding, investors can make profitable investments in companies that share the characteristics with Aldi, such as Walmart, Kroger, and Costco. In addition, the success of Aldi portrays how the American retail market is changing and the ways investors can benefit from these changes.
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