Axfood’s first-quarter report misses expectations and the share falls nearly 9%. The company’s growth is now lower than the market’s. The temporary VAT reduction weighed on the result, says CEO Simone Margulies.
Sales amounted to SEK 21,595 million, an increase of 2.6%. The operating margin was 3.7% compared to last year’s operating margin of 3.4%.
According to Factset, the estimate was SEK 21,967 million for sales and 3.8% for the operating margin.
Weaker growth
Axfood’s retail sales grew by 3.8% in the quarter, which is lower than the market’s 4.4%. This is after having exceeded market growth for the past ten years.
According to the company, the growth rate was in line with the market, excluding City Gross , which closed stores.
The restructuring of City Gross is said to be going according to plan and the forecast is maintained that the chain will return to profitability sometime in 2026.
“We’re doing some restructuring. We’re closing a handful of stores that aren’t performing as we think they should,” Margulies says.
E-commerce sales growth also fell short of the market, at 6.1% compared to 9.3%.
VAT cut pressures earnings
The temporary VAT reduction that came into effect on April 1 meant that major efforts needed to be made to change the price of millions of goods.
Axfood and suppliers agreed not to change the prices of goods in the days before the VAT reduction, says Margulies.
But the discount chain Willys, which accounts for 56% of sales, chose to lower the price of its goods two days before April 1, which weighed on the result.
Axfood’s first quarter 2026
| SEK million | 1Q26 | Estimate | Deviation (%) | 1Q25 | Change YoY |
| Turnover | 21,595 | 21,967 | -1.7% | 21,040 | 2.6% |
| Operating profit | 806 | 840 | -4.0% | 719 | 12.1% |
| Operating margin (%) | 3.7% | 3.8% | -2.4% | 3.4% | 9.2% |
| Net profit | 525 | 558 | -5.9% | 453 | 15.9% |
| Earnings/share (SEK) | 2.42 | 2.64 | -8.3% | 2.09 | 15.8% |
Source: Factset and company reports
As usual market over reacts and the share price dropped today. I took the opportunity to add few more shares, as I am always eager to add such good companies.
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