Simone Margulies: Axfood maintained a high level of activity during the second quarter

Axfood has a unique business model and structure with strong positions in all market segments. We invest in the long term in expansion to strengthen our presence, in development of our store concepts to increase competitiveness, and in product supply and technology to drive efficiency.
Retail sales increased 2.1% during the second quarter, in a market that grew 3.7%. Despite our very strong sales increase last year, a negative calendar effect and food price deflation, growth did not reflect our ambitions. Our performance however varied between our different businesses, and Hemköp continued to demonstrate very strong growth.
While it is still too early to draw any firm conclusions about how the reduction in food VAT has affected consumer purchasing behaviors, we nevertheless noted a stronger volume trend in the market in the second quarter. At the same time, the world is facing uncertainty and it is clear that consumers are continuing to focus on price value.

Strong quarter for Hemköp

Hemköp continued to deliver an impressive performance with growth of a full 7.4%, reflecting the long-term work to strengthen the store chain’s market position. With prime store locations and an attractive, affordable assortment focused on inspiration and sustainability, Hemköp once again gained market share during the quarter and reported a healthy increase in earnings.
Willys’ quarterly growth of 1.0% compares with a very strong sales increase of 10.2% in the previous year. With a continued strong position, Willys is the store chain most recommended among households. Willys continues to develop its customer meeting and upgrades the store network to the latest Willys 5.0 store concept. At the same time, new Willys stores are being opened at a rapid rate to reach even more consumers. We are seeing good growth in both newly established and refurbished stores, and have now passed the milestone of four million Willys Plus members. Willys also focuses on increasing the growth rate in the short term through targeted tactical measures.
With the City Gross acquisition, we have taken position in the attractive hypermarket segment, and work to develop the chain into a long-term, competitive player is ongoing. A highlight of the quarter was the launch of a new store concept at a pilot store in Linköping. While quarterly growth was somewhat lower than previously, earnings improved year-on-year. Our ambition to achieve profitability at some point during the second half of the year remains unchanged.

Increased earnings through focus on costs and efficiency

Overall, we reported stable earnings growth in the second quarter, despite the lower growth rate. Working cost-effectively is part of our business model and is particularly important now as we work to mitigate the effects of food price deflation and higher fuel prices. Above all, we are continuing to optimise the productivity and cost-efficiency of our new logistics structure, while also developing new ways of working using new technology and scaling up our use of data and AI. Our efforts to streamline the Group’s support functions are also contributing to cost savings.

High sustainability ambitions and SBTi-validated climate targets

Axfood aims to be a positive force in society, taking the lead in promoting a sustainable food system and contributing to better public health, not least through assortment development and research collaborations. During the quarter, we launched new, innovative products that promote sustainable and healthy consumption, including hydrothermally treated light meals and hybrid products.
In the quarter, fruit and vegetables volumes grew, which contributed to a higher share of sales of sustainability-labelled products. We are also continuing to see positive effects from our transition to renewable fuels and electricity in transports with reduced emissions. In late spring, our new, ambitious climate targets were validated by the Science Based Targets initiative (SBTi), marking an important milestone in our efforts to reduce our negative impact on the climate and biodiversity.
I would also like to highlight the Group’s focus on diversity and inclusion. For example, we contribute to helping young people in vulnerable areas enter the workforce through paid internships and are now expanding with more SAO jobs, and through the newly established Forum for Inclusion.

Strengthened presence and focus on the future

I can now summarise a quarter marked by a high level of activity and increased earnings. We have strong market positions, clear strategic priorities and several ongoing initiatives to strengthen our presence, competitiveness and efficiency. With distinctive concepts, a shared culture and focus on execution, we are well-equipped to continue developing and creating value over time. Simone Margulies President and CEO Axfood
Axfood maintained a high level of activity during the second quarter, with a focus on further strengthening presence, competitiveness and efficiency. With distinctive concepts, a shared culture and focus on execution, we are well-equipped to continue developing and creating value over time.

Simone Margulies 
President and CEO Axfood