Axfood Q2 2025 presentation: Market share gains drive strong revenue growth

Introduction & Market Context

Swedish grocery retailer Axfood AB (STO:AXFO) delivered a strong second quarter performance for 2025, significantly outperforming the broader food retail market. According to the company’s Q2 2025 presentation released on July 11, Axfood continued to gain market share while driving growth across all business segments.

The company’s retail sales surged 22.9% year-over-year, with an 8.8% increase when excluding the recently acquired City Gross chain. This substantially outpaced the overall food retail market, which grew by 6.2% during the same period.

As shown in the following chart of market share development, Axfood has steadily increased its position in the Swedish grocery market, reaching 25.4% in the first half of 2025 compared to just 17.6% a decade ago:

Quarterly Performance Highlights

Axfood reported net sales of SEK 22,995 million for Q2 2025, representing a 9.3% increase compared to the same period last year. Operating profit rose to SEK 934 million (836m), with an adjusted operating profit of SEK 959 million (836m). The operating margin improved slightly to 4.1% (4.0%), with the adjusted operating margin at 4.2% (4.0%).

The company’s e-commerce segment continued its strong momentum, with sales increasing by 12.3% compared to the market growth of 7.9%. Excluding City Gross and Middagsfrid, e-commerce sales grew by 6.2%.

The following chart illustrates Axfood’s net sales growth trajectory and the contribution from various operating segments:

Operating profit showed solid improvement across segments, with the company highlighting that higher profits stemmed from both strong sales growth and improved cost efficiencies, particularly in logistics operations:

Segment Performance

Willys, Axfood’s discount grocery chain, delivered particularly strong results with net sales increasing by 10.2% and like-for-like sales up 8.3%. Operating profit for the segment reached SEK 565 million (509m), maintaining a stable operating margin of 4.5%. The total Willys store network expanded to 254 locations, up from 243 in the prior year.

Hemköp reported net sales growth of 6.4%, with retail sales including franchises increasing by 5.8% and like-for-like sales up 4.6%. The segment’s operating profit improved to SEK 97 million (87m), with operating margin expanding to 4.7% (4.4%). Hemköp’s total store network, including franchises, reached 325 locations.

City Gross, which Axfood acquired on November 1, 2024, contributed SEK 2,319 million in net sales during the quarter. While the segment reported an operating loss of SEK 45 million (adjusted operating loss of SEK 20 million), retail sales showed positive growth of 2.6% with like-for-like sales up 3.5%. The company noted a "high activity level to strengthen the concept for the future," suggesting ongoing integration efforts.

Snabbgross, Axfood’s wholesale business, delivered "strong performance in a weak market" with net sales increasing by 5.9% and like-for-like sales up 4.7%. Operating profit rose to SEK 96 million (84m), with operating margin improving to 6.0% (5.5%).

Dagab, the group’s logistics and purchasing division, reported net sales growth of 7.9% and operating profit of SEK 298 million (247m), with operating margin improving to 1.4% (1.3%). The company highlighted improved efficiency in logistics operations as a key driver of profitability.

Strategic Initiatives & Sustainability

Axfood continued to advance its sustainability agenda during the quarter, with a particular focus on renewable energy. The company inaugurated Sweden’s largest solar park in Hallstavik, marking a significant milestone in its green transition efforts.

The company has also made substantial progress in reducing emissions from its transport operations, with a 20% reduction in CO2 emissions per tonne of goods compared to 2021 levels:

Axfood’s strategic initiatives during the quarter focused on strengthening its market presence and improving operational efficiency. The ongoing integration of City Gross remains a priority, with the company working to strengthen the concept for future profitability.

Financial Position & Outlook

Axfood reported strong cash flow from operating activities, reaching SEK 1,929 million in Q2 2025:

The company’s financial position remains solid, although the net debt level is higher than in the prior year due to loans raised for the City Gross acquisition. The equity ratio has been impacted by the higher debt level, but capital efficiency metrics show a slightly positive trend in return on capital employed compared to the prior year:

For the full year 2025, Axfood maintained its outlook with planned capital expenditures of SEK 1,600-1,700 million and plans to establish 10-15 new Group-owned stores. The company expects items affecting comparability of approximately SEK 100 million.

According to the earnings call transcript, CEO Simone Margulies emphasized the company’s commitment to sustainability and competitive pricing, stating, "We are convinced that this will continue also going forward, considering the increased price awareness among consumers in general." CFO Anders Lexmon highlighted the importance of investing in customer relations, saying, "For us, it’s all about creating the possibility for us to invest in the customer meeting to be really competitive in the market."

Axfood’s shares have responded positively to the strong results, with the stock price increasing by 1.16% to SEK 286.60 as of October 14, 2025. The company has maintained dividend payments for 24 consecutive years, with a current dividend yield of 3.09%.

Investors can gain further insights into Axfood’s strategic direction at the company’s upcoming Capital Markets Day, scheduled for September 18, 2025, in Stockholm.

Full presentation:

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