Simone Margulies: "A positive trend in customer traffic and higher volumes"

In Axfood, we are well positioned to navigate shifts and a changing market thanks to our strong and distinctive concepts. In 2024 we increased our market shares despite high comparison figures and in the fourth quarter we
increased our presence in the hypermarket segment through the acquisition of City Gross. Retail sales growth was 14.1% in the quarter. To us, the business logic to drive long-term growth and profitability in food retail is built upon customer traffic, loyalty and volume growth. Our strong development in all these areas is gratifying evidence that the customers appreciate our offerings. Market dynamics is characterised by more cautious and
price-conscious consumers as well as intense competition, which during the quarter had an impact on the gross margin. Our focus on productivity and cost efficiency has been intensified, and with our structure and the
investments we are making in the base operations we have a good platform to gradually improve our competitiveness over time.

Strengthened market positions

Willys continued to grow more than the market during the final quarter of the year, with growth of 4.8%. Willys have never before had a stronger market position, and it is clear that its momentum is continuing with continued high customer traffic and increased loyalty. Willys is maintaining a high rate of new store establishments in order to further expand its presence and availability around the country, to reach more consumers looking for low prices and has the chain as their first choice. The fourth quarter saw another strong development for Hemköp, with like-for-like growth of 4.6%. The chain has made great strides in recent years to strengthen its position in the market, and several new store establishments will create the conditions to further improve the position. Earnings for the quarter were charged with costs for new establishments, but the earnings and margin trends were strong for the year as a whole. Snabbgross has been navigating a challenging café and restaurant market in the last few years, with increased volumes and a higher number of customers, resulting in a stronger market position and growing market share. This trend continued into the fourth quarter, with strong growth of 6.3% and earnings that were in line with the prior year.

Increased productivity in logistics

We have made extensive investments in logistics, aiming to streamline our operations and create capacity to continue to grow more than the market.
Following completion of the ramp-up of the new logistics centre in Bålsta in the autumn, our focus has been on optimising the operations. E-commerce flows are also being implemented in parallel with the optimisation of
store flows. We are now seeing increased productivity and efficiency, and we expect a gradual improvement in productivity in the coming year. In addition to the efforts in Bålsta, the expansion of the existing high-bay warehouse in Backa, Gothenburg and the optimisation of the fruit and vegetable warehouse in Landskrona have entered their final phases.

Initiatives to strengthen City Gross

The acquisition of City Gross was completed during the quarter, and we took over as the new owner on 1 November. This acquisition gives us a clear presence in the hypermarket segment, the fastest-growing segment in the market after discount, and we see great potential in the chain. We have a clear plan and have since completing the acquisition introduced several initiatives to strengthen City Gross’ competitiveness, including initiatives related to the brand and concept, the store operations and the assortment. To create a more healthy foundation, we are also planning structural measures at a handful of stores during the year, mainly pertaining to conversions to other concepts. Our ambition is to strengthen City Gross and the estimate is now that we will reach profitability at some point during the second half of 2026.

Important progress in sustainability

Important progress was made in sustainability in 2024. As we previously announced, we have chosen to accelerate the transition to renewable fuels in transports and to move the deadline for phasing out fossil fuels ahead by five years. This positive trend continued during the fourth quarter, resulting in a reduction of over 30% in the carbon footprint from our own transports since last year, and nearly 60% over a three-year period. We also reached our target of a 50% reduction in food waste in our own operations compared with the base year 2015, a full year ahead of schedule. At the same time, household price awareness continued to have a negative impact on sustainable and healthy food consumption. We are working intently to reverse this trend by offering our customers a sustainable and healthy assortment of products and guiding them towards sustainable and healthy choices.

Customer focus to continue to challenge

To encourage even more customers to shop with us, we will continue to maintain a high rate of new store establishments in 2025 and beyond. Our ambition for 2025 is to expand the store network by 10–15 new Group-owned stores, the majority of which will be Willys. Axfood has a strong financial position, and the Group’s investment needs are expected to amount to between SEK 1.6 billion to 1.7 billion in 2025. The Board of Directors
proposes that the Annual General Meeting approve an increased dividend of SEK 8.75 per share, to be paid out on two occasions. We have now ended a year during which we increased our market share and took major steps to improve the customer meeting and strengthen our competitiveness. We are entering 2025 with a lot of energy and see major opportunities to further challenge, strengthen our positions and take advantage of our longer-term initiatives.

Simone Margulies
President and CEO, Axfood AB

Read Axfoods year-end report for 2024