Sweden: Increased market shares and stable profit development
- DRC Discount Retail Consulting GmbH
- Apr 26
- 3 min read
Discount Retail Chain Willys, owned by Axfood, is Sweden’s most recommended grocery chain and holds a unique market position. Willys recorded growth of 3.0% in the first quarter with positive trends in both customer traffic and loyalty. The discount segment has been the market’s fastest growing segment for a long time, with a clear preference shown among younger consumers and families with children. We see considerable potential to continue expanding the chain, adding more stores at a rapid rate. With an attractive offering in the traditional grocery market segment owned by Axfood grocery retail chain Hemköp also performed well in the first quarter with growth of 3.1% and particularly strong growth in like-for-like sales. As well in the restaurant and café segment, Snabbgross continued to deliver strong growth of 5.2% despite a continued weak market.
With the acquisition of City Gross, Axfood has established a presence in the attractive hypermarket segment. City Gross has faced a number of challenging years, and the trend in the first quarter was also weak with growth of -3.8%. As previously communicated, this year will be a transitional year, and the initiatives that City Gross is now implementing will take time to yield results. It has a clear plan in place to strengthen the store chain, and given our experience, expertise and capacity, seeing considerable opportunities to turn City Gross into a profitable business at some point in the second half of 2026.
Axfood reached a significant milestone in its logistics operations during the quarter when e-commerce flows were implemented at the new automated logistics centre in Bålsta. The logistics centre is now fully operational for both stores and e-commerce in all temperature zones. The facility’s productivity is showing a gradual and clear improvement, and we expect to realise efficiency improvements of SEK 200–300 million, at an annualised rate, from the second quarter. As previously announced, this will contribute to a continued lower cost level in logistics and make Axfood more competitive.
With the logistics centre in Bålsta, Axfood has secured long-term capacity and efficiency in the flow of goods in central and northern Sweden. It plans for the next steps in the development of its logistics structure to create additional capacity and efficiency in the southern parts of Sweden from the year 2030 and onwards. The plan is to establish a new automated logistics centre in the Gothenburg region that first and foremost will replace its existing warehouse in Backa. At the same time, Axfood are looking into how to handle volume growth for the other warehouses in the south of Sweden. In the coming quarters, Axfood will provide more details around the plans and initiate negotiations with relevant parties and stakeholders.
As part of its continuous work to increase productivity and cost efficiency, in the quarter Axfood also initiated work on streamlining its support functions to further strengthen its competitiveness.”
First quarter summary
Net sales increased 3.9% to SEK 21,040 m (20,252).
Retail sales increased 15.7% to SEK 18,829 m (16,281). Excluding City Gross, retail sales increased 3.0%.
Operating profit amounted to SEK 719 m (817) including items affecting comparability of SEK -38 m (-). The operating margin was 3.4% (4.0).
Adjusted operating profit amounted to SEK 757 m (817) and the adjusted operating margin was 3.6% (4.0).
Net profit for the period amounted to SEK 453 m (560) and earnings per share before dilution to SEK 2.09 (2.60).
The Annual General Meeting (AGM) on March 19 resolved on a dividend to shareholders of SEK 8.75 (8.50) per share. The dividend amount is divided into two payments of SEK 4.50 and SEK 4.25, with the first payment made in March and the second payment to be made in September. Caroline Berg was elected as the new Chairman, and Björn Annwall and Kristofer Tonström as new Board members. The Board also resolved on the repurchase of a maximum of 385,000 shares linked to the long-term share-based incentive program LTIP 2025, which was resolved on by the AGM.
Work has been initiated to plan for the next steps in the development of Axfood’s logistics structure to create conditions for growth, higher efficiency and increased capacity from the year 2030 and onwards. This work comprises the southern parts of Sweden, and the plan is to establish a new automated logistics centre in the Gothenburg region. Plans are in the early stages and more details will be provided in the coming quarters.
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