Axfood continued to grow and improve its earnings in the third quarter, and has now turned City Gross from loss-making to profitable. The market is characterised by falling food prices, cost pressure and intense competition. While value for money remains a key factor for consumers, we are seeing some signs of quality and convenience being given more consideration. With strong and distinctive concepts, and investments that improve our efficiency and competitiveness, we are well-positioned for continued profitable growth.
Axfood continued to evolve and grow in a dynamic market. Household purchasing power has increased in recent years on the back of real wage increases, tax cuts and the temporary reduction in food VAT. However, we know that the reality is different for every household, and value for money remains a key factor when customers shop for groceries.
In parallel, we see that customers are not making an either-or choice. Many want to keep the cost of their weekly groceries down while still occasionally spending a little more on a ready-made meal when time is short or treating themselves to something extra for the weekend. Customers are paying closer attention to prices, while other needs also influence what they put in their baskets. Value for money and quality are not mutually exclusive – this is increasingly how consumers shop.
This is where Axfood has a unique strength. With attractive and differentiated store concepts, we meet customers’ varying needs, while maintaining focus on both value for money and other customer benefits.
Strong and distinctive concepts that meet a variety of needs
In a market where more people can afford to buy more, Axfood’s thirdquarter growth was largely driven by higher volumes. Retail sales increased by 2.9% against high comparison figures and market growth of 4.0%. We reached a major milestone, surpassing SEK 90 billion in annualised net sales.
Willys holds a very strong position but grew at a slower pace than the market in the third quarter with a 2.1% sales increase. With the customer meeting as our top priority, we work to further increase growth with a focus on price, campaign, assortment and loyalty. During the quarter, this work contributed to a more positive trend compared with the second quarter. At the same time, we continue to upgrade stores to the latest store concept, Willys 5.0, and these stores are having a clear impact on both growth and profitability. We also continue to open new stores to enable more customers to shop at Willys. A few weeks ago, we opened our northernmost store to date, in Kiruna, which was met with a fantastic reception.
Hemköp is continuing to advance its position and gained significant market share following volume-driven sales growth of 7.1%. The store chain is also delivering strong earnings. It is rewarding to see the chain’s long-term efforts to modernise its stores and expand its assortment paying off. Hemköp combines food inspiration with value for money, and its strong performance in areas such as ready-made food and delicacies confirms the indications we are seeing that convenience and the dining experience are being given somewhat more consideration.
Profitability in City Gross two years after the acquisition
When we acquired City Gross, our ambition was to achieve profitability at some point in the second half of 2026. We are now delivering on that ambition. In the quarter, like-for-like sales increased, and the chain reported positive earnings, less than two years after the acquisition. This is encouraging and the result of extensive efforts by many employees across both City Gross and the Axfood Group. The next step is to gradually strengthen profitability and enable the chain to be competitive long term.
Investments that deliver results
In a market facing deflation, cost pressure and intense competition, our earnings improved as a result of volume growth and cost control. This is where our structure becomes a real strength. Dagab and Axfood IT allow us to leverage our resources and investments to benefit all of our store chains. Our investments in technology, AI, automation and logistics are boosting our efficiency and making a clear contribution to earnings growth. The fact that productivity at the logistics centre in Bålsta reached its highest level to date during the quarter is a testament to this.
I would also like to highlight our ambitious sustainability agenda, which includes positive trends in sustainability-labelled products and initiatives to reduce plastic use and drive the transition to electrified transport. We continue to play an active role in the public debate and, together with our partners, we promote improved public health, increased organic production, climate change mitigation measures and sustainable fishing.
Despite an uncertain global environment, we have continued to invest in recent years, and we can clearly see that this has strengthened our competitiveness. Greater efficiency has put us in a better position to develop our offerings and provide attractive prices, while continuing to progress towards our profitability target.
Good food should be accessible to more people
For me, an important part of our mission is about ensuring that more people have the opportunity to buy affordable, good and sustainable food. To succeed, we are working to achieve an optimal combination of attractive offerings and efficient operations. We can see that these efforts are yielding results. Now we are continuing to evolve in order to attract more customers and drive profitable growth.
Simone Margulies President and CEO Axfood
