This article first appeared on GuruFocus .
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Market Growth:4.4% during the quarter.
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Axfood Retail Sales Growth:3.8% in the quarter.
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Consolidated Net Sales Growth:2.6% in the quarter.
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Group Operating Profit:SEK 806 million.
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Operating Margin:3.7%.
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Adjusted Operating Profit:SEK 812 million.
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Adjusted Operating Margin:3.8%.
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Willys Earnings:SEK 498 million, with an operating margin of 4.1%.
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Hemkop Retail Sales Growth:Almost 6%.
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Hemkop Operating Profit:SEK 114 million, with an operating margin of 5.1%.
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City Gross Like-for-Like Growth:3.6%.
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City Gross Operating Loss:SEK 48 million on an adjusted basis, with an operating margin of -2.4%.
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Snabbgross Operating Profit:SEK 25 million, with an operating margin of 2%.
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Dagab Net Sales Growth:Almost 4%.
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Dagab Operating Profit:SEK 298 million, with an operating margin of 1.5%.
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Cash Flow from Operating Activities:Almost SEK 1.1 billion.
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Net Debt:Increased compared to year-end 2025.
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Equity Ratio:17.3%.
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Total Investments:SEK 561 million in Q1.
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New Store Establishments:Four new group-owned stores in the quarter.
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Warning! GuruFocus has detected 9 Warning Signs with LTS:0R6R.
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Release Date: April 23, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Axfood AB ( LTS:0R6R ) reported a strong financial performance with group operating profit increasing to SEK 806 million and an improved operating margin of 3.7%.
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The company demonstrated volume growth across its segments, with Hemkop showing a particularly strong performance, increasing its market share and retail sales growth by almost 6%.
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Axfood AB ( LTS:0R6R ) successfully implemented a VAT reduction across millions of items, showcasing effective collaboration and execution throughout the organization.
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The company launched over 100 new private label products, focusing on sustainability and health, which contributed to an increase in private label sales to over 32%.
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Axfood AB ( LTS:0R6R ) is investing in long-term growth by expanding its store network and modernizing existing stores, creating new growth opportunities.
Negative Points
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Retail sales growth for Axfood AB ( LTS:0R6R ) was below market expectations, with a 3.8% increase, which was lower than hoped for.
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Willys, a key segment, experienced temporary negative effects on sales growth due to major store refurbishments and relocations.
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The company faced increased costs due to manual work for price adjustments and IT development related to the VAT reduction.
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Axfood AB ( LTS:0R6R ) experienced a negative cash flow of minus SEK 692 million in the first quarter, impacted by inventory building ahead of Easter.
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The geopolitical tensions in the Middle East have led to increased fuel costs and a weaker Swedish krona, which could impact future profitability.
Q & A Highlights
Q: Can you quantify the temporary negative effects on Willys' sales growth due to major store refurbishments? A: Two Willys stores were closed for relocation, impacting sales growth negatively. These closures, along with ongoing large store modernizations, affected like-for-like growth. The stores were closed by the end of last year, and if they had been operational, retail sales growth in Willys could have been around 1 percentage point higher.
Q: How did the pre-VAT price reductions impact Willys and City Gross, and was the short-term top-line strengthening effect less than expected? A: The price reductions two days in advance had a negative effect, along with increased marketing activities and personnel costs for changing prices. The expected volume increase did not materialize as hoped, and the sales for Easter followed the usual pattern, not benefiting from the early price cuts.
Q: Have you seen any changes in consumer behavior since the VAT reductions? A: It is too early to determine the effects of the VAT reduction on consumer behavior due to the turbulent environment, including the war in the Middle East and increased costs for fuels and energy. The focus on price value remains important for consumers.
Q: How did geopolitical tensions and input cost increases affect your pricing strategy? A: Increased costs, such as fuel and fertilizers, have a lead time before impacting store prices. The market remains highly competitive, and while costs may rise, the long-term effects depend on ongoing developments. The company continues to focus on efficiency and cost control.
Q: What drove the higher joint group costs this quarter, and what is a normalized level going forward? A: The higher joint group costs were due to several projects undertaken for the entire group. These costs can vary from quarter to quarter, and a fairer comparison would be with the first quarter of last year for a normalized level.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
