With a focus on the customer meeting and further volume growth, Axfood continued to strengthen its market positions in the first quarter of the year. We reported a stable earnings performance and maintained a high level of activity in areas deemed to be strategically important for increased efficiency and market presence. A number of activities have also been initiated to strengthen City Gross. In logistics, the productivity of our recently completed logistics centre in Bålsta is continuing to improve, and we are now initiating the next steps in the development of the logistics structure to create additional capacity and efficiency from 2030 and onwards.
With a focus on the customer meeting and further volume growth, Axfood continued to strengthen its market positions in the first quarter of the year. We reported a stable earnings performance and maintained a high level of activity in areas deemed to be strategically important for increased efficiency and market presence. A number of activities have also been initiated to strengthen City Gross. In logistics, the productivity of our recently completed logistics centre in Bålsta is continuing to improve, and we are now initiating the next steps in the development of the logistics structure to create additional capacity and efficiency from 2030 and onwards.
Following a period of low inflation, Statistics Sweden reported that food price inflation was once again on the rise, reaching an annualised rate of 3.8% in the first quarter due to various global factors, including insufficient supply of raw materials, climate change and geopolitical turbulence. Many consumers are affected, and it is evident that our customers are still largely focusing on price value and low prices. In the first quarter we increased our retail sales by 15.7%, driven by a positive trend in customer traffic and higher volumes. We continued to clearly gain market share also excluding the acquisition of City Gross, with growth of 3.0%. Growth for the market was impacted by a substantial negative calendar effect of -2.3%.
Our long-standing history of delivering a strong performance in various economic climates is proof of our ability to navigate shifts in consumer behaviour. At Axfood, we are making systematic and concentrated efforts to both improve our internal efficiency as well as offset the cost pressure arising upstream in the food supply chain, in order to ensure an affordable and attractive offering for our customers.
Continued momentum for Willys, Hemköp and Snabbgross
Willys is Sweden’s most recommended grocery chain and holds a unique market position. Willys recorded growth of 3.0% in the first quarter with positive trends in both customer traffic and loyalty. The discount segment has been the market’s fastest growing segment for a long time, with a clear preference shown among younger consumers and families with children. We see considerable potential to continue expanding the chain, adding more stores at a rapid rate. With an attractive offering in the traditional grocery market segment, Hemköp also performed well in the first quarter with growth of 3.1% and particularly strong growth in like-for-like sales. In the restaurant and café segment, Snabbgross continued to deliver strong growth of 5.2% despite a continued weak market.
High level of activity to strengthen City Gross
With the acquisition of City Gross, Axfood has established a presence in the attractive hypermarket segment. City Gross has faced a number of challenging years, and the trend in the first quarter was also weak with growth of -3.8%. As previously communicated, this year will be a transitional year, and the initiatives that we are now implementing will take time to yield results. We have a clear plan in place to strengthen the store chain by clarifying the concept and brand, improving the customer offering, implementing a chain management structure and streamlining operations. A new communications concept and a stronger, more affordable customer offering were recently launched. We are also implementing structural measures, including conversions of the stores in Borlänge and Bromma to Willys stores. Given our experience, expertise and capacity, we see considerable opportunities to turn City Gross into a profitable business at some point in the second half of 2026.
Initiatives to increase capacity and efficiency
We reached a significant milestone in our logistics operations during the quarter when e-commerce flows were implemented at the new automated logistics centre in Bålsta. The logistics centre, which is one of Europe’s largest, is now fully operational for both stores and e-commerce in all temperature zones. The facility’s productivity is showing a gradual and clear improvement, and we expect to realise efficiency improvements of SEK 200 300 million, at an annualised rate, from the second quarter. As previously announced, this will contribute to a continued lower cost level in logistics and make Axfood more competitive.
With the logistics centre in Bålsta, we have secured long-term capacity and efficiency in the flow of goods in central and northern Sweden. We are now planning for the next steps in the development of our logistics structure to create additional capacity and efficiency in the southern parts of Sweden from the year 2030 and onwards. The plan is to establish a new automated logistics centre in the Gothenburg region that first and foremost will replace our existing warehouse in Backa. At the same time, we are looking into how to handle volume growth for the other warehouses in the south of Sweden. In the coming quarters, we will provide more details around the plans and initiate negotiations with relevant parties and stakeholders. As part of our continuous work to increase productivity and cost efficiency, in the quarter we also initiated work on streamlining our support functions to further strengthen our competitiveness.
A positive force in society
As one of Sweden’s largest food retail players, we have a social responsibility. Our approximately 15,000 employees work each day to supply customers across large parts of the country with a comprehensive assortment of groceries. At the same time, we are working to establish an even broader presence, primarily bringing our discount offering to locations where we are not currently active by expanding to areas of Sweden where no discount alternative is available. We challenge, advocate for and invest in inclusion, more sustainable and healthy consumption, and a reduced carbon footprint throughout the entire food supply chain. We aim to be a positive force in society, which is something that all of us at Axfood are passionate about.
Simone Margulies
President and CEO, Axfood AB
