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1. Company Snapshot

1.a. Company Description

Axfood AB (publ) engages in the food retail and wholesale businesses in Sweden.It operates through Willys, Hemköp, Dagab, and Axfood Snabbgross segments.The company operates its retail business through Willys, Hemköp, and Eurocash chains; and the online store, Mat.se.


It is also involved in the e-commerce business; and provision of private label products.In addition, it offers home delivery of meal kits under the Middagsfrid name, as well as operates Urban Deli, a combined restaurant and market hall concept; and Apohem, an online pharmacy solution.The company serves restaurants, foodservice operators, and cafés; and retailer-owned stores, mini-marts, service stations, and other convenience retailers.


It operates 65 Hemköp, 219 Willys, and 26 Snabbgross group-owned stores; and 133 Hemköp and 126 Tempo franchises.The company was founded in 1958 and is headquartered in Stockholm, Sweden.Axfood AB (publ) is a subsidiary of Axel Johnson AB.

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1.b. Last Insights on AXFO

Axfood AB's recent performance was driven by robust retail sales growth and strategic acquisitions. The company's Q4 2024 earnings call highlighted strategic growth amidst market challenges. Axfood reported a 12.6% increase in retail sales, driven by its successful acquisitions, including the purchase of Hemköp. The company's focus on strategic growth and expansion has positioned it for long-term success. Axfood's recent acquisition of Hemköp is expected to contribute to future growth, and the company's share buyback program will help reduce outstanding shares and increase earnings per share."

1.c. Company Highlights

2. Axfood's Q3 2025 Earnings: Strong Volume Growth and Improved Profitability

Axfood reported a strong Q3 2025 with consolidated net sales growing 7% driven by Willys, Hemköp, and Snabbgross. The group's operating profit increased to SEK 1 billion, with an operating margin of 4.8%. Adjusted operating profit was SEK 1.1 billion, and the adjusted operating margin was 4.9%. Earnings per share (EPS) came in at 3.43, beating analyst estimates of 2.96. Revenue growth was driven by volume growth, with e-commerce growing 11%. The company's logistics structure has been developed for continued growth, and they announced plans for a new logistics center in Kungsbacka, Southern Sweden.

Publication Date: Oct -25

📋 Highlights
  • Strong Q3 Performance:: Axfood reported 7% consolidated net sales growth, driven by Willys, Hemköp, and Snabbgross, with a group operating profit of SEK 1 billion (4.8% margin).
  • Willys Outperformance:: Achieved 6% market growth with a stable 4.9% operating margin, earning SEK 587 million in operating profit.
  • Hemköp Growth:: Retail sales up 6% (exceeding market), operating profit increased to SEK 103 million with a 5.1% margin.
  • City Gross Turnaround:: Like-for-like sales growth of 3% and cost reductions; expected to return to profitability by H2 2026 with SEK 150 million in structural cost estimates.
  • Strategic Investments:: New logistics center in Kungsbacka announced, with Q3 cash flow at -SEK 40 million but strong underlying operating cash flow and SEK 1.3 billion in investments (excluding acquisitions).

Segment Performance

Willys outperformed the market with 6% growth, driven by higher volumes and a higher average ticket value. Earnings grew to SEK 587 million, with a stable operating margin of 4.9%. Hemköp's retail sales grew 6%, exceeding the market, with operating profit increasing to SEK 103 million and an operating margin of 5.1%. City Gross reported a negative operating profit, but like-for-like growth was slightly over 3%, representing a positive trend. Snabbgross delivered 6% growth, with operating profit increasing to SEK 101 million and an operating margin of 6.3%. As Simone Margulies noted, "Our business model and structure create opportunities, and we are well-positioned to meet consumers' diverse needs."

Valuation and Outlook

Axfood's valuation metrics indicate a relatively high price-to-earnings (P/E) ratio of 26.83 and a price-to-book (P/B) ratio of 9.13. Analysts estimate next year's revenue growth at 4.3%. The company's strong Q3 performance and guidance suggest that it is on track to meet its full-year outlook. With a dividend yield of 3.32% and a free cash flow yield of 7.71%, Axfood appears to offer an attractive combination of growth and income. The return on equity (ROE) is 33.06%, indicating a high level of profitability.

Operational Highlights

The company's logistics arm, Dagab, is realizing efficiency gains, but the gross margin development is affected by mix effects. The company expects to see the efficiency gains from Dagab in the long term. Axfood is also investing in strategic areas to enhance efficiency and competitiveness, including the expansion of Willys with 7 new stores opened this year. The number of new group-owned stores will be 9, with 3 retailer-owned stores joining the network.

3. NewsRoom

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European Market: 3 Stocks That Could Be Trading Below Fair Value

Nov -06

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European Stocks That May Be Trading Below Estimated Value

Oct -31

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European Market Gems 3 Stocks Estimated To Be Trading Below Intrinsic Value

Oct -31

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3 European Stocks Estimated To Be Trading Up To 48.2% Below Intrinsic Value

Oct -30

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Three European Stocks That May Be Priced Below Their Estimated Value

Oct -30

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3 European Stocks That May Be Priced Below Their Estimated Value

Oct -27

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Axfood (OM:AXFO) Announces New Nominating Committee for 2026 AGM

Sep -10

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Axfood AB (STU:AXL1) Q4 2024 Earnings Call Highlights: Strategic Growth Amidst Market Challenges

Jan -31

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.52%)

6. Segments

Willys

Expected Growth: 3.5%

Willys from Axfood AB (publ) achieves 3.5% growth driven by increasing demand for convenient and affordable grocery shopping, successful private label expansion, and strategic store renovations. Additionally, investments in e-commerce and digital marketing enhance customer experience, contributing to sales growth.

Dagab

Expected Growth: 3.2%

Dagab's 3.2% growth is driven by increasing demand for online grocery shopping, strategic partnerships with food producers, and efficient logistics management. Additionally, Axfood AB's strong brand portfolio and focus on sustainability contribute to Dagab's growth. Furthermore, investments in digitalization and e-commerce capabilities have enhanced the customer experience, driving sales and revenue growth.

Home Purchase

Expected Growth: 4.5%

Axfood AB's 4.5% growth in Home Purchase segment is driven by increasing consumer preference for online grocery shopping, strategic partnerships with food delivery services, and expansion of its e-commerce platform. Additionally, the company's focus on private labels, competitive pricing, and improved logistics have contributed to the growth.

Quick Gross

Expected Growth: 3.8%

Axfood AB's 3.8% Quick Gross growth is driven by increasing market share in the Swedish food retail market, successful private label expansion, and effective cost control measures. Additionally, strategic investments in e-commerce and digitalization have enhanced customer experience, contributing to the growth.

Reconciling Items

Expected Growth: 3.0%

Axfood AB's 3.0% growth is driven by increasing market share in the Swedish food retail market, successful implementation of its e-commerce strategy, and effective cost control measures. Additionally, the company's focus on private label products and strategic partnerships with suppliers have contributed to the growth.

7. Detailed Products

Dagab

A grocery retail chain offering a wide range of food and non-food products

Hemköp

A grocery retail chain focusing on fresh produce and meat, with a strong emphasis on quality and sustainability

Willys

A discount grocery retail chain offering affordable prices on a wide range of products

Axfood Närlivs

A convenience store chain offering a wide range of convenience products and services

M Matkassen

A meal kit delivery service offering pre-measured ingredients and recipes

Snabbgross

A wholesale business offering a wide range of food and non-food products to professional customers

8. Axfood AB (publ)'s Porter Forces

Forces Ranking

Threat Of Substitutes

Axfood AB (publ) operates in the food retail industry, where substitutes are readily available. However, the company's strong brand presence and customer loyalty mitigate the threat of substitutes.

Bargaining Power Of Customers

Axfood AB (publ) operates in a competitive market, but its strong brand presence and customer loyalty reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Axfood AB (publ) relies on a diverse supplier base, which reduces the bargaining power of individual suppliers. However, the company's dependence on a few large suppliers increases the bargaining power of these suppliers.

Threat Of New Entrants

The food retail industry has high barriers to entry, including significant capital requirements and regulatory hurdles, which reduce the threat of new entrants.

Intensity Of Rivalry

The food retail industry is highly competitive, with several established players competing for market share. Axfood AB (publ) faces intense competition from rivals such as ICA Gruppen and Coop Sverige.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.67%
Debt Cost 4.95%
Equity Weight 41.33%
Equity Cost 4.95%
WACC 4.95%
Leverage 141.98%

11. Quality Control: Axfood AB (publ) passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sainsbury

A-Score: 6.8/10

Value: 7.4

Growth: 7.6

Quality: 2.5

Yield: 7.5

Momentum: 7.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Kesko

A-Score: 5.7/10

Value: 5.6

Growth: 4.2

Quality: 3.6

Yield: 7.5

Momentum: 4.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Axfood

A-Score: 5.6/10

Value: 4.2

Growth: 5.8

Quality: 4.1

Yield: 5.6

Momentum: 5.0

Volatility: 9.0

1-Year Total Return ->

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Stock-Card
Colruyt

A-Score: 5.2/10

Value: 7.7

Growth: 4.6

Quality: 4.3

Yield: 6.9

Momentum: 1.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Carrefour

A-Score: 5.2/10

Value: 7.4

Growth: 4.6

Quality: 1.6

Yield: 7.5

Momentum: 2.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Greggs

A-Score: 5.0/10

Value: 7.1

Growth: 6.6

Quality: 5.7

Yield: 6.2

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

269.1$

Current Price

269.1$

Potential

-0.00%

Expected Cash-Flows