Axfood AB (publ)

Solid Q3 performance despite tough trading (deflation + cost pressure): Axfood continued to grow and increase earnings in a competitive market. Retail sales grew ~3% (stronger than Q2). Net sales grew 2% (reported net sales excluding VAT; underlying consumer prices fell ~2% YoY in Q3 per Statistics Sweden). Group operating margin was ~4.9% (reported and adjusted), described as resilient despite deflation and cost headwinds (e.g., higher fuel prices). Items affecting comparability were SEK 1m in Q3 vs SEK 39m a year ago.

Segment highlights: Willys modest LFL; Hemköp strong momentum; City Gross achieved profitability target (surprising/positive): - Willys: Total sales +~2%, like-for-like positive but modest; operating margin ~4.7% (slightly lower) due to modest growth (deflation held back). Management emphasized customer-meeting measures: price/campaigns/assortment/loyalty plus store upgrades to Willys 5.0. - Hemköp: Sales +7%, driven by higher volumes + higher ticket; like-for-like growth remained strong; operating margin up to 5.8% (strong cost control and stable gross margin). Ready meals/convenience and “food inspiration” highlighted as gaining importance. - City Gross: Notably improving profitability faster than expected: management said they are delivering on the ambition to reach profitability during H2 2026 and that 12-month rolling is now breakeven. Improvement attributed to structural measures/efficiency plus closing underperforming stores (e.g., Helsingborg store closure, converted to Willys). - Snabbgross: Sales flat YoY, restaurant market declined in share; margin down to ~5.1% (gross margin pressured by investments; volume growth didn’t fully offset). New MD appointed for integration/turnaround focus.

Full-year guidance revised—mainly timing, capex and cost recognition pushed out (negative/neutral but important): Capital expenditure forecast reduced to SEK 2.0–2.1bn (from previous). Automation investment delays for the Kungsbacka logistics center (remaining automation shifted to next year); ramp-up still expected to begin in 2030, with potential risk of further delay not ruled out. Some planned City Gross structural costs also postponed (affecting comparability). Management framing: revisions are mostly timing, not a collapse in underlying profitability drivers.