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Retail

Axfood Chief Hails 'Truly Good Start To The Year', With Sales Up 7.6%

By Steve Wynne-Jones
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Axfood Chief Hails 'Truly Good Start To The Year', With Sales Up 7.6%

The chief executive of Swedish retailer Axfood, Klas Balkow, has praised the retailer's "truly good start to the year", as the retailer posted a 7.6% increase in consolidated net sales to SEK 11.4 billion, up from SEK 10.7 billion a year earlier.

The group's performance was driven by store sales growth of 9.7%, and what Axfood described as 'vibrant growth' in e-commerce sales.

“Axfood’s first quarter in 2018 shows a truly good start to the year, with strong growth and higher earnings," said Balkow.

"Sales in our stores were far higher than estimated market growth, which shows that we continue to gain market shares. The Willys stores, in particular, had good sales for the entire quarter and capped this off with very strong Easter sales."

Operating profit at the group stood at SEK 435 million for the quarter, which is an increase of 9.6% from the SEK 397 million it reported in the same period last year. Operating margin was 3.8%, and net profit for the period was SEK 338 million.

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In terms of its e-commerce division, Balkow said that the group's online platforms continue to "develop favourably", now reaching more than five million consumers.

"The strong online shopping is good for sales, but continues to weigh down earnings," he said. "Despite this, we delivered a higher operating profit than the same quarter a year ago. With an operating margin of 3.8% we are on track to our long-term target of 4%, and we continue to deliver according to our strategic agenda.”

Divisional Performance

The group's Willys segment was the best performing division in its portfolio, with net sales rising 13.0% to stand at SEK 6.5 billion for the period.

It said that Willys was boosted by 'good like-for-like sales growth, strong e-commerce business' and the addition of the Eurocash operations. During the period, Willys rolled out e-commerce in an additional three cities, meaning it now offers online shopping at 40 stores in 22 cities.

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Its Hemköp division posted a 3.9% increase in net sales to SEK 1.6 billion, while Dagab was up 3.8% and Axfood Snabbgross rose 2.9%.

Hemköp's performance also benefited from an increase in private label performance, with own-brand share at the banner now at 24.3%, up from 23.5% for the same period last year.

Profit-wise, Willys posted a 13.7% increase in operating profit, with Hemköp up 1.5%; however Axfood Snabbgross (-10%) and Dagab (-3.5%) saw declines in profit.

Restructuring

The year has already seen some reorganisation take place within Axfood, with the transfer of transfer of customer responsibility for Tempo to Hemköp, the reporting of Axfood Snabbgross as a separate segment, and the transfer of other Axfood Närlivs customers to Dagab.

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Since the period end, the group has also announced a share repurchase scheme of a maximum of 240,000 shares, which is coupled to its long-term share-based incentive programme LTIP 2018.

Share repurchases are scheduled to commence on 15 May.

Outlook

Commenting, Balkow anticipated that the group is in line to grow by "more than the market" this year, and record an operating margin of "at least 4%".

"We are continuing our strategic work on strengthening our business and working towards our mission: to contribute to better everyday life, where everyone can enjoy affordable, good and sustainable food," he commented.

© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine

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