Sweden's Axfood said that its Willys supermarket banner and its wholesale operation Axfood Snabbgross were the main drivers of its positive performance in the second quarter of its financial year.
Axfood reports sales growth of 6.7% in the quarter, to SEK 13.04 billion (€1.23 billion), with operating profits up 10.2% to SEK 601 million (€56.9 million) in the period.
Operating margin was 4.6%, while Axfood also noted that the new IFRS accounting standard had a positive effect on its operating profits, of SEK 44 million.
Its Willys business saw net sales rise 8.9% in the quarter, while its Hemköp business was up 0.4%. Axfood Snabbgross rose by 6.8%, with Dagab up 6.7%.
Investment
The group said that it is making a number of 'future-oriented investments' in its store network, as well as its e-commerce and logistics operations.
These include a recently-signed cooperation agreement with retailer Östenssons, which will become a Hemköp franchisee as of 1 September.
In addition, following the Q2 period, the group signed a long-term lease with property firm NREP Logicentres for its new automated logistics centre in Bålsta, northwest of Stockholm.
Strong Position
“Our sales growth of 6.7% is proof that our various food concepts are consolidating already strong positions in their respective segments," commented Klas Balkow, Axfood chief executive.
"Willys and Axfood Snabbgross in particular are distinguishing themselves in a positive light," he added. "We also report an online sales growth of 37%. The store network is growing and being upgraded, and we are happy to see that every new store is welcomed by a constantly growing and loyal customer base."
Balkow said that the business delivered a second-quarter operating profit that surpassed that of the same period last year, even without the benefit of IFRS.
"This is gratifying especially in light of the fact that we are at the same time continuing to invest in a number of ambitious future ventures that are weighing down earnings in the short term, but which we are fully confident will contribute to our continued profitable growth over time," he said.
First Half
In terms of its first half performance, Axfood said that its consolidated net sales were up 5.5% to SEK 24.97 billion, while operating profit was up 10.9% to SEK 1.09 billion.
Operating margin for the half was 4.4%, up from 4.1% in the corresponding half last year.
Axfood will announce its third quarter results on 24 October.
© 2019 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.
