Axfood threatens ICA and Coop
One year after Axfood's acquisition, supermarket chain City Gross reports a positive quarter. At the same time, Willys and Hemköp continue to take market share from ICA and Coop.
CEO Simone Margulies does not hide the fact that she is reasonably satisfied with the development in Axfood in 2025.
Axfood entered 2025 with clear goals of growth and consolidation in the Swedish grocery market. Throughout the year, the group has combined price pressure from Willys, a clearer profile for Hemköp and the integration of City Gross to strengthen its market position.
The results for the whole of 2025 show that this strategy has had measurable effects, Axfood taking market shares and increasing margins.
How Axfood achieved its growth
Axfood's progress in 2025 can be explained by several interacting factors. Willys has continued to be the price leader and attracts price-conscious customers, which increases frequency and volume in the stores. This provides the basis for better purchasing conditions.
Axfood seems also to have a balanced chain portfolio with Willys (low price), Hemköp (premium/urban) and now City Gross (supermarket/volume). It is reason to believe that Axfood covers several customer segments without major internal cannibalization.
- Increased volume provides a better negotiating position with suppliers and lower cost of goods sold, which contributes to margin improvement.
- Central management of campaigns and assortment allows Axfood to implement price and cost measures faster than more fragmented competitors.
City Gross from problem to opportunity
The acquisition of City Gross in November 2024 from Bergendahl & Son AB / Bergendahl Food Holding was costly and risky. The purchase price was approximately SEK 2 billion, and the chain previously had a negative operating margin of -2.4%.
After one year under Axfood's management, City Gross is now showing signs of stabilization and profitability, with Q4 2025 as the first positive quarter (+14 MSEK). This marks an important milestone in the integration work.
Summary of January-December
Net sales increased by 6.1 percent to SEK 89,152 million (84,057).
Retail sales increased by 16.4 percent to SEK 79,204 million (68,052). Excluding City Gross, the increase was 5.9 percent.
The operating profit amounted to SEK 3,572m (3,290) including items affecting comparability of SEK -116m (-143). The operating margin amounted to 4.0 percent (3.9).
The profit for the period amounted to SEK 2,375m (2,219) and the profit per share to SEK 10.84 (10.16).
The board proposes an increased dividend of SEK 9.00 per share (8.75). The dividend is divided into two payments, SEK 4.50 per share in March 2026 and SEK 4.50 per share in September 2026. Totally 1,88 mrd. SEK.
The investments during 2026 are expected to amount to SEK 2,200-2,300 million excluding acquisitions. Approximately SEK 470 million relates to automation in the new logistics center in Kungsbacka, according to Axfood.
During 2026, the establishment of 10-15 new own-owned stores is planned.
Consequences for competitors
- Axfood's progress increases the pressure on ICA and Coop. ICA, which is still the market leader, faces challenges related to a more fragmented franchise model and a heavier cost structure then Axfood.
- Coop struggles with a weak price position and a high cost base, which makes them vulnerable in a market where low prices and efficient logistics are increasingly important.
- Lidl is growing fast from a small base in Sweden. Probably no threat in the short term, but Lidl is the fastest growing grocery chain in the world so everyone has to take Lidl into consideration in the long term.
Sources: Axfood, Coop, ICA, NHH, Fri Köpenskap, DN, ESM.