Axfood earnings for the third quarter of 2026 showed City Gross turning profitable as the Swedish grocery group maintained a 4.9% operating margin despite food-price deflation. Results released on October 22 showed net sales rising 2%, while Hemköp delivered stronger growth and the company lowered its full-year capital expenditure outlook.
Key Takeaways
- City Gross became profitable in the quarter and reached break-even on a rolling 12-month basis.
- Hemköp retail sales rose 7%, contrasting with modest growth at Willys and flat sales at Snabbgross.
- Axfood reduced its 2026 capital expenditure outlook to SEK2.0–2.1 billion while retaining its store-opening plans.
Table of Contents
- Axfood earnings mark a turnaround at City Gross
- Hemköp leads as Willys and Snabbgross face pressure
- Lower investment outlook leaves expansion plans intact
- Conclusion
Axfood earnings mark a turnaround at City Gross
Axfood’s third-quarter interim results confirmed City Gross had moved from loss-making to profitable. Management attributed the improvement to structural measures, including closing underperforming stores, efficiency gains, changes to the operating model and a better customer offering.
City Gross also recorded positive like-for-like sales growth, improving on the second quarter. Its fifth store closure, in Helsingborg, took place in mid-August.
Quarterly profitability and rolling 12-month break-even represent different milestones: the latest quarter was positive, but the longer period had not yet produced a profit. Chief Executive Simone Margulies said the priority was to strengthen City Gross’s competitiveness and gradually improve profitability. Management did not provide a forecast for 2027.
| Item | Details |
|---|---|
| Q3 net sales | SEK22.711 billion |
| Q3 operating profit | SEK1.118 billion |
| Q3 earnings per share before dilution | SEK3.47 |
| Net debt/EBITDA | 0.6 excluding IFRS 16; 2.1 including IFRS 16 |
| Net working capital | Minus 2.7% of sales |
Hemköp leads as Willys and Snabbgross face pressure
Hemköp’s 7% retail sales growth was driven by higher volumes and increased customer traffic, while its operating margin rose to 5.8%. The sales growth rate was broadly in line with the second quarter.
Willys increased total sales by just over 2%, with positive but modest like-for-like growth. Its operating margin slipped to 4.7%, although gross margin was stable. Margulies said the chain was refining its customer offering and price position while continuing store modernization.
Snabbgross sales were unchanged from a year earlier, and the restaurant wholesaler lost market share. Earnings declined and its operating margin fell to 5.1%. From the start of 2027, Axfood plans to integrate the convenience business currently within Dagab into Snabbgross.
Across the group, retail sales grew almost 3%, supported by higher volumes but slightly trailing the market. Falling food prices restrained reported sales growth, so the revenue increase did not fully reflect the rise in quantities sold.
Lower investment outlook leaves expansion plans intact
Axfood revised its full-year capital expenditure outlook to SEK2.0–2.1 billion, somewhat below its previous expectation, with some investments delayed. The company also said delays in ramping up the Kungsbacka logistics center could not be ruled out.
The group had established eight new stores during the year and retained its plan for 10–15 openings in 2026. Management expects 70 Willys stores to have the 5.0 format by year-end, including about 25 modernizations during 2026.
Third-quarter cash flow was broadly in line with the previous year, but year-to-date cash generation was weaker. Axfood linked the weaker operating cash flow to the VAT cut’s effect on net working capital. Credit facilities utilized at quarter-end totaled SEK3 billion, somewhat higher than at the end of the second quarter.
Conclusion
The next scheduled guidance update is the fourth-quarter report, when management said it would provide further detail on store expansion. For Axfood earnings, the key operational test is whether City Gross can build on its first profitable quarter while Willys and Snabbgross improve their growth performance.
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