Swedish retailer Axfood boosts profits by 66% - Food Retailing - Brief Article

Eurofood, Nov 7, 2002

Sweden's number three food chain, Axfood, lifted its nine-months earnings after net financial items by 66% to SKr670m (73.8m [euro]) after better performance in its Willys discount chain, its Finnish operations and Dagab wholesale unit.

Sales rose more modestly by 2.8% to SKr24.5bn to September.

From December last year to September this year, the number of Axfood-operated outlets had increased by ten to 286 units and sales in this group isolated rose by 10.3% in the period.

Axfood still struggles to get its upmarket Hemkop chain back to profits.

Hemkop posted both lower sales and profits, the latter operating profit fell to SKr69m from SKr92m a year ago.

CUT COSTS

In a move to cut costs, the unit is scaling back of some of its more high-profile features such as the exclusive meat purchasing agreements with individual Swedish meat farmers.

Axfood managing director Mats Jansson said the group target for a profit margin of 3% set to be reached only by 2005 had already been reached as the whole Axfood group had reached a 3.6% profit margin in the third quarter.

The better than expected profit was due to the strong performance at Willys. The group's Finnish Spar operations, for instance, although profitable, had an operating margin of only 1.2%.

"We're now going to secure this profit margin so it becomes stable. Furthermore, we're going to expand the Willys concept and turn around the trend in Hemkop," said Jansson.