Swedish food retailer Axfood AB has seen a significant turnaround at its City Gross banner, reversing a period of sustained financial difficulties. While details remain limited, the improvement stems from a series of strategic initiatives, according to the company.
The resurgence of City Gross, a chain that had been struggling, is notable within the broader Swedish food retail market. Axfood’s overall Q3 2025 results, released in October 2025, showed retail sales growth of almost 20%, with approximately 6% growth when excluding the impact of recent acquisitions. This positive trend is occurring within a Swedish food retail market that experienced overall growth of 5.4% during the same period.
However, Axfood CEO Patrick Grabenbauer cautioned against overstating the recovery. But in all honesty, City Gross is not seeing cannon figures,
Grabenbauer told Dagligvarunytt, a Swedish trade publication. This suggests that while the situation has improved, City Gross is still not performing at peak levels.
Axfood’s broader financial performance in Q3 2025 was strong. Consolidated net sales increased by almost 7% during the quarter. Group operating profit rose to just over 1 billion SEK (Swedish Krona), with a stable operating margin of 4.8%, or 4.9% when adjusted. The company’s Willis and Hampshire banners also contributed to the positive results, with Willis reporting 6% growth and a 4.9% operating margin, and Hampshire showing a 6% retail sales increase and a 5.1% operating margin.
Snabjos, another Axfood banner, experienced 6% growth in the quarter, with an operating profit of 101 million SEK and a margin of 6.3%. Dargap saw a 5% net sales increase, with an operating profit of 341 million SEK and a margin of 1.7%. These results demonstrate a broad-based improvement across Axfood’s portfolio of retail brands.
The company’s e-commerce business also performed well, growing by 11% compared to a market growth rate of 8%. This indicates that Axfood is successfully capturing a larger share of the rapidly expanding online grocery market in Sweden.
Axfood’s financial strength is also reflected in its cash flow, which was 40 million SEK in Q3, a significant increase of 380 million SEK compared to the same period last year. Net debt increased due to recent acquisitions, including CTOs and leasehold debt, but the company’s equity ratio remains healthy at 20.4%, above its target of 20%.
Looking ahead, Axfood is continuing to invest in its infrastructure. The company is building a new, highly automated logistics center in southern Sweden to improve efficiency and increase capacity. During the quarter, Axfood expanded its store network with 9 new group-owned stores and 3 retail-owned stores joining the network.
The broader retail landscape is facing headwinds. According to Forbes reporting from , the luxury market is slowing, with online sales flat and customer numbers down. However, livestream e-commerce is emerging as a potential solution to bridge the gap between luxury brands and consumers. This trend highlights the importance of adapting to changing consumer behavior and embracing new technologies.
Elsewhere in the retail sector, companies are grappling with various challenges. Estée Lauder is facing tariff headwinds of approximately $100 million, according to CNBC reporting from . Meanwhile, Coca-Cola is forecasting modest growth amid concerns about demand, as reported by CNBC on . The beverage giant’s outlook reflects the broader economic uncertainty impacting consumer spending.
The CNBC reporting also indicates a resurgence of interest in mall brands like Abercrombie & Fitch, driven by Gen Z’s nostalgia for 2016. This suggests that brands with strong brand recognition and a connection to past trends may be well-positioned to capitalize on changing consumer preferences. Target is also investing in store staffing while reducing other roles, signaling a shift in priorities towards enhancing the in-store customer experience.
The retail sector is also being impacted by broader economic trends. A Yahoo Finance report on Axfood AB highlights the importance of factors such as food price inflation, which was running at an annualized rate of 4.4% in Sweden during Q3 2025. Managing these inflationary pressures is crucial for retailers to maintain profitability and attract customers.
Finally, the success of Jennifer Garner’s Once Upon a Farm, which saw its shares rise 17% on its public market debut, demonstrates the potential for brands with a strong mission and a loyal customer base to thrive in the current environment. This highlights the growing importance of purpose-driven brands that resonate with consumers on a deeper level.
