7/17/2012 10:52 AM
Once again Axfood delivered a solid profit and favourable sales performance. Good store operations, a larger number of customers and continued high efficiency and cost control have contributed to the profitable growth.
Favourable earnings for all units
Willys posted good sales with continued strong earnings. The operating margin of 4.4% is well in line with the target of 4% over time. To defend Willys' position in the market and improve customers' shopping experience, another four stores have been modernized. The remaining approximately 25 stores in the renewal programme will be upgraded during the coming two years.
Hemköp showed good growth and stable earnings. The main focus has been on driving sales and implementing the new brand platform, entailing a number of different marketing activities. In addition, in April a new store was opened at an attractive location in central Stockholm. This will further strengthen Hemköp's position in the key Stockholm market. Hemköp's target of reaching an operating margin of 3% for 2012 remains.
PrisXtra reported yet another quarter of favourable profitability, despite disruptive roadwork nearby two stores.
Närlivs has had continued favourable growth, mainly due to additional volumes from new agreements. However, a slightly negative Easter effect and poorer weather conditions compared with the same period a year ago affected like-for-like sales and thus also earnings. During the period, an agreement was signed with MatHem i Sverige AB on the sale of the Netxtra online grocery shopping business. At the same time, a delivery agreement was signed with MatHem i Stockholm. The agreement strengthens Axfood Närlivs' role as the leading supplier of food to online retailers.
Dagab had stable development during the period, with high efficiency. As in the preceding quarter, earnings were affected by higher costs associated with implementation of the new business system. Additional, related costs will be charged against earnings in coming quarters.
Market outlook 2012
Swedish consumers have continued to show cautious optimism. However, a number of dark clouds continue to overshadow the business environment and could have an adverse effect on the Swedish economy and consumption going forward. Food price inflation continues to be low, and we continue to believe that it will not exceed 1% for the full year.
Strategy for profitable growth
An ambitious pace of investment and good cost control will ensure profitable growth. Investing in store modernizations is a prerequisite for meeting our customers' expectations for a better shopping experience. At the same time, our focus is on stimulating sales growth through attractive customer offers and a high share of private label products. Parallel with this, implementation of the new business system is also continuing. Total capital expenditures in 2012 are estimated to be SEK 900-1,000 m (993).
Axfood's goal for 2012 is to achieve an operating profit at the same level as in 2011.
President and CEO