Axfood AB (publ)

Good morning, everyone. This is the Axfood first quarter 2025 telephone conference. And with me today are Simon Margulis, president and CEO, and Anders Lexman, CFO. In the investor section of our Axfood.com website, you will find the presentation material for today's call. We encourage you to have that presentation at hand as you listen to our prepared commentary. After the presentation, we will be taking questions. And a recording of this call will be made available on our website. I will now hand over to the words to Simone. So please go to page number two.

Thank you, Alex. And good morning, everyone. With a focus on the customer meeting and further volume growth, we continue to strengthen our market position in the first quarter of the year with Willys, Hemshop and Snabjos. We reported a stable earnings performance and maintained a high level of activity in areas that are strategically important for increased efficiency and market presence. A number of activities have also been initiated to strengthen Citygross, which we acquired on November 1st last year. In terms of logistics, the productivity of our recently completed logistics center in Bålsta is continuing to improve. And now we have also initiated plans to expand capacity and efficiency in the southern parts of Sweden from 2030 and onwards. We will of course cover all these areas in today's presentation, but first let us turn to page 3 and today's agenda. I will start with a brief market overview and then I will give you a review of our first quarter performance and strategic agenda. Following that, Anders will take you through the financials. And lastly, just a brief summary from me before we open up for questions. Turning to page four, but let's go straight to page five and take a look at the developments during the first quarter. Food retail market growth was 1.9% in the first quarter. Growth was impacted by a negative calendar effect of minus 2.3%, given leap day last year and also time on Easter. Following a period of low inflation, Statistics Sweden reported that food price inflation was once again on the rise in the first quarter, reaching an analyzed rate of 3.8%. This is due to various global factors, including shortages in the supply of raw materials, climate change, and geopolitical turbulence. Adjusting for calendar effects and inflation, market growth amounted to 0.4%. Growth in Axos retail sales amounted to almost 16%. We clearly gained market share and that was true also if we exclude Citigrass as the adjusted growth was 3%, driven by a positive trend in customer traffic and increased volumes. Retail sales growth over a two-year period amounted to 24%, almost three times the rate of the market, Also here, our growth, excluding city growth, exceeded that of the market. In e-commerce, growth amounted to 4.1%, which compared to market growth of 2.2%. Excluding city growth and this continued business mid-last year, our sales were on par with the prior year. We are now on page six. Growth in consolidated net sales amounted to almost 4% during the first quarter and despite the negative calendar effect. Higher volumes in Willys, Hemsköp and Snabgross was the main driver behind this. Sales in Citigrass amounted to just over 2 billion SEK. On a group net sales basis, the contribution from Citigrass was 290 million SEK or just over 1% due to internal eliminations in Dagab. So please go to the next page, number seven. Group operating profit amounted to 719 million SEK and the operating margin was 3.4%. Operating profit includes items affecting comparability of minus 38 million SEK related to city growth. Adjusted operating profit, which excludes items affecting comparability, amounted to 757 million SEK and the adjusted operating margin was 3.6%. Operating profit in Willys and Daga have increased, while profits in Hemshep and Snabros declined somewhat. Citigrass had a weak start of the year, and I'll get back to this development shortly. The Axford Group adjusted operating profit, excluding Citigrass was higher than in the prior year, and the corresponding operating margin was unchanged. We maintain significant focus on productivity and cost efficiencies. With our structure and investments in our operations, we have a solid foundation for operational excellence. And during the first quarter, we also initiated work to improve efficiencies in our support functions across the group to further increase our competitiveness. Let's go into a little bit more detail, starting with Willis on page eight. As I just mentioned, sales growth for Willys was strong in the first quarter at 3% and clearly above the rate of the market. In addition, Willys is back to earnings growth as operating profit increased compared to the prior year and amounted to 495 million SEK, which corresponded to a flat operating margin of 4.3%. The higher profit was mainly driven by increased volumes, a stable gross margin development and good cost control. Turning to page nine. Willys is Sweden's most recommended grocery chain and holds a unique position of the market. Growth in the first quarter was driven by positive trends in both customer traffic and loyalty. In total, the amount of members in Willys Plus loyalty program increased 5.1% year-on-year on a net basis to more than 3.8 million. In terms of loyalty, the number of members making a purchase also increased 3.4% year on year. So strong trend in both attracting new members and increasing the number of active members. We also see even stronger brand perception as measured by consumer consideration and preference. We have shown these charts before, but they are worth showing again with updated figures as these metrics really display how strong the Willys brand is among consumers. We're now on page 10. It is evident that price value and low prices are still very much in focus for our customers. Just over the last few years, these factors have really become top of mind for people when deciding which store to do their grocery shopping in. Price value even surpassed location as the single most important factor a couple of years ago, a historic change which is still true today. The discount segment has been the market's fastest growing segment for a long time. And in terms of the demographic profile of shoppers, there is a clear preference among younger customers and families with children. And we interpret this as a good sign for future growth and potential. In addition, the discount segment is still relatively small in Sweden when compared to markets in many other countries. So to put this into context for Willys, we see considerable possibilities to continue expanding the chain, adding more stores at a rapid rate. Let's turn to page 11 and the Hampshire segment. With an attractive offering in the traditional grocery segment of the market, HempShop also performed strongly in the first quarter, with a retail sales growth of 3.1%, and life-for-life sales growth were very similar at 2%. Both numbers clearly above the market, which primarily was driven by increased volumes from a higher number of customer visits. Total net sales for HempShop increased 5.1%. Operating profit amounted to 94 million SEK and the operating margin was 4.6%. The margin was somewhat lower than in the prior year. However, it was still a very good level compared to the recent year. While higher sales volumes had a positive impact on earnings, a somewhat lower gross margin impacted negatively. There were also some effects related to new establishments. Turning to page 12. With Citygross, Axfood has established a presence in the hypermarkets, an attractive segment that over time has become a larger share of the Swedish food retail market. Citygross has faced some challenges in the recent years, and the trend the first quarter was also weak. On a like-for-like basis compared to the year earlier, when Axfood was not the full owner of Citygross, retail sales were down 3.3%, In total retail sales decreased 3.8%, mainly due to volume declines and the closure of one store. The adjusted operating profit was negative and amounted to minus 80 million SEK, mainly explained by the weak growth in like-for-like sales. Items affecting comparability pertain to a structured cost, including costs related to closing the store in Bromma in Stockholm, ahead of concept change to Willis. And the adjusted operating margin was minus 3.9%. We are now on page 13. As previously communicated, this year will be a transitional year for Citigrass, and the initiatives that we are now implementing will take time to yield results. We maintain a high activity level to strengthen the chain by revitalizing the concept and brand, improving the customer offering, implementing a chain management structure and streamlining operations. A new communications concept and a stronger, more affordable customer offering were recently launched. We are also implementing structural measures, including conversions to the stores in Borlänge and Roma to Wille stores. And giving our experience, expertise and capacity, we see considerable opportunities to turn Citygross into a profitable company at some point in the second half of 2026. Turning to page 14. In the restaurant and café segment, Snabgross continued to deliver strong growth of 5.2% despite the continued weak market. Sales were up 4.1% on a like-for-like basis. A higher number of customer visits had a positive impact on sales. Unlike the food retail market, the overall calendar effect did not impact the outcome since the negative effect of the lease date in the preceding year is deemed to have been offset by a positive calendar effect related to Easter. Operating profit was basically in line with the prior year and amounted to 25 million SEK, corresponding to an operating margin of 2%. While increased sales and stable gross margin trend had a positive effect on earnings, new store establishment and investment in expanding Snuggles Club negatively impacted the earnings trend. Moving on to page 15 and Dagav. Dagav's net sales increased by 3.5% with sales to Willys, Hemsworth and Snabros driving the increase in the quarter. Operating profit increased to 287 million SEK and the operating margin was slightly higher than at 1.5%. The earnings trend was primarily due to the positive sales growth. The gross margin declined slightly, which was partly offset by lower cost as a result of the progress made in the logistics restructuring. Let's go to page 16. During the quarter, the implementation of e-commerce flows at the logistics center in Bålsta was completed, marking the end of the ramp up for the facility. Productivity and efficiency improved during the quarter, thanks to a focus of optimization. And from the second quarter of 2025, previously announced efficiency improvements of 200-300 million SEK on an annual basis are expected to be realized, contributing to a continued cost savings and improving Axfood's competitiveness. In addition to investments in Bålsta, the expansion of the 16 high bay warehouse in Backe, Gothenburg, and the optimization of the fruit and vegetable warehouse in Las Krona are in their final phases to increase capacity and streamline operations. We are now on page 17. In recent years, we have had a very strong growth in Daga through organic volume developments and expansions, including the acquisition of Bajendals Food. With the logistics center in Båsta, we have secured capacity and efficiency to handle volumes in the middle and northern parts of Sweden. Now and naturally, we're planning for the next steps in the development on our logistics structure to create additional capacity and efficiency also in the southern parts of Sweden and from the year 2030 and onwards. The plan is to establish a new automated logistics center in the Gothenburg region, but first and foremost, we'll replace our existing warehouse in Bakka. However, we are also analyzing how to handle volumes among the other warehouses in the southern Sweden. These initiatives will create a modern and highly efficient infrastructure to secure capacity and growth and contribute to strengthening our competitiveness. While it's still early days, we will provide more details in the coming quarters and initiate negotiations with relevant parties and stakeholders. Turning to page 18, now it's time for Anders to walk you through the financial development So please go to the next page, number 19. Anders, please go ahead.

Thank you, Simone. So we are now on page 19. In the first quarter, cash flow from operating activities was 463 million SEK lower compared to the prior year. The relatively weak cash flow from operating activities compared to last year was mainly due to a strong working capital performance last year, which was boosted by accounts payable related to Easter. The cash flow from investment activities was minus 400 million SEK, slightly lower compared to last year. We saw a lower pace in warehouse investments, but a higher pace in store modernizations. The cash flow from financing activities was in line with last year. The higher dividend and amortization of leasehold debt was offset by a higher usage of credit facilities. So then please turn to page number 20. The net debt has increased during the last two quarters due to the acquisition of Citigros. In addition to the loans raised for the acquisition, net debt also increased with the Citigros leasehold debt of approximately 2 billion SEK and the dividend paid out in Q1. This is also reflected in the higher net debt ratio. At the end of the first quarter, we utilized approximately 3.3 billion SEK of our credit facilities, approximately 2.5 billion SEK more than in the first quarter last year, and 400 million SEK more than in Q4. The equity ratio was lower than December 2024 and amounted to 16.8%. The lower equity ratio compared to Q1 last year was a result of the Citigroup's acquisition. The decrease in the first quarter was in line with previous years and is also seasonal effect from dividend paid. The total investments excluding leasehold and acquisition for the first quarter amounted to 373 million SEK. During the first quarter, we established two new Group 1 stores. In Q1 last year, we didn't establish any stores. So then please turn page to page number 21. Looking at capital efficiency, we had a negative development of the rolling 12-month networking capital. The impact of the city goes acquisition is expected to increase the KPI with approximately 0.3 percentage points on a rolling 12-month basis. We also saw a negative effect from the last year all-time high accounts payable balance in March. Capital employed has increased over the last years, mainly due to both the acquisition of Berendals Food and Citygross, as well as the investments in Bålsta. The level of capital employed, however, decreased in Q1, mainly as a result of the dividends. Due to the decrease in capital employed, the return on capital employed increased somewhat to 16.8% compared to last year. And thereby, Simon, I am done with my part, so I hand over to you again.

Thank you, Anders. We are now on page 22, but let us go straight to page 23. Our outlook for the year is unchanged and it covers investments, new store establishments and items affecting comparability. With regards to new establishments, we open up two new group-owned stores in the quarter, of which one is Willys and one is Hemma, so please now turn to page 24. Every other year, Axwood holds a capital market day to provide more information about the group's operation and development, and this year it's time again, so I encourage you to mark September 18 in your calendars. We will of course cover many areas at the event, areas that are important for our group to drive profitable and sustainable growth over a long term. More details around the CMD will follow in due time. We are now on page 25 and the last page of today's presentation. We summarized the quarter in which we increased market shares and strengthened market positions with a continued positive volume development from strong customer traffic and loyalty. We maintain a high activity level to strengthen Citigroup's competitiveness and in logistics we finalize the ramp of a Bålsta as well as initiated plans for new steps in the development of the logistics structure. We see major opportunities ahead to further challenge and benefit from our long-term initiatives. Now please turn to page 26 and I hand over to the operator to open up for the line for questions. Thank you.

If you wish to ask a question, please dial pound key five on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Magnus Raman from Kepler Shoebrew. Please go ahead.

Good morning. Yes, it's Magnus Raman here. I'd like to first start to ask, Hi, good morning. I'd like to ask about the annual efficiencies. You mentioned here that you expect to achieve these 200 to 300 million annual efficiencies starting already now from Q2 this year. However, if I got it right, the parallel warehousing costs will continue to some extent all through to H1 2026. So could you confirm if that's correct? And then I guess that we will see some additional boost to savings from H1 2026.

The warehouses that we will keep to 2026 is Skellefteå and Säta. These are really small warehouses, to be honest. The large warehouse that we had was Jordbru, of course, which was the main part. And then we have also closed now Årsta, which is comparable, pretty small also, but that's where we had our e-comm. that we have now moved to to bosta so uh that's actually uh why we also say the two to three hundred will will be realized from the second quarter and going onwards and uh both set and philosophy are really smart handling some um volumes for the uh convenience market so they will be moved to other blue that will be positive but i mean it's not burial though

Right, so in the range of 0 to 50 or something like that, would that be a fair assumption?

Sorry, could you take the question?

I didn't really... Yeah, a range of 0 to 50 million SEK savings when those smaller warehouses will eventually be finally closed. Would that be a fair assumption?

I wouldn't give any forecast on that because it's really not material. We stick to the 300. That's a range that will cover that also.

Sure, fair enough. Then on 50 gross, I guess it's apparent that the path to profitability here goes to improving the like-for-like sales. And when thinking about that and trying to sort of figure out that the trajectory here in terms of margins towards your break-even point that you see the second half of 26. um do we expect that you would sort of push price emotional investments and so on in the in the near-term quarters to improve lifelike sales to check traffic and so on so that that a dip and then later clear rise in margin towards break-even is a more likely path or or do you rather see it would be a gradual sort of improvement along the along the way

We have an extensive program going on for Citygross covering operational efficiencies, new brand, promise a new store concept, customer offering. We will also improve the price worthiness in city girls and all these initiatives are going in parallel. And that's also that's we also earlier communicate that 2025 will be a year, a transitional year. And so I would say like 2025 will be a transitional year that we have earlier communicate and I'm going for for profitability the second half of 2026.

Right, but you wouldn't care to comment about the sort of the loss in Q1 if that's sort of a low point or... I can communicate.

The 80 million is in line with last year, so it's the last year we were not fully owner of Citigrass, but it's actually in line with last year.

Right, okay, thanks. And then final one maybe. You mentioned here how the food price inflation has been picking up now in the recent two months after having been quite stable for 12 preceding months or so on two or lower percent. Now looking ahead do you see that the stronger Swedish krona could sort of alleviate this food price inflation and possibly help with the product margin recovery in Swedish grocery retail or how do you view it?

There's a really wide range of things that are affecting the prices in the market. As you said, the Swedish corona is a positive thing, but however, we also have a turbulent geopolitical environment going the last years, and it's not... We don't see any measures of going in a more positive direction. We have also the climate changes. We're also depending a lot. I don't know if you know, this is pretty dry out there and that will affect the prices also. So as you say that the currency is a positive thing for us talking regarding prices. However, there are so many different things that are affecting the price development. So I can give you an action forecast going forward.

Sure. Just have one for maybe for Anders or I don't know also about the new DC here. Firstly, I can ask just is this the aim for open operation in 2030? And then when we think about the CapEx profile here, do you think that sort of the CapEx for Bolster would be a good rough indicator or do you see that this size would be really small or clearly different somehow?

That is things that we have to come back to when we have clear plans on that. And like Simone said earlier, now we have communicated that we're looking into it and we have to, we will come back to that when we are more clear on that. The figures related to CapEx among other things.

sure but just overall basis is south and sweden should we deem that to be sort of roughly half of your national volumes or is it a material difference no it's a fair assumption i would say okay okay thank you very much thank you very much thank you thanks the next question comes from frederick iverson from abg please go ahead

Thank you. Good morning, guys. Three questions. First, you mentioned the negative effect of Easter being late this year a couple of times in the presentation. Just curious to hear whether you might have any assessment of the earnings impact of this in Q1.

Yeah, as you said, Easter, we had calendar effect due to Easter and also the leap day and Easter is coming, as you all know, in April. And as you say, the calendar effect, of course, we have them on top line, but also on the bottom line. So you could, we also see effects of the calendar effect in the evening.

And do you have any rough assessment of the earnings impact?

I think they correlate, as you say. They are connected to each other, as you know.

Okay, fair. Second one on Willis. The margin here was stable year on year, and you call out the stable gross margin in the report as well. And then six months ago, we remember the margin in Willis being down one percentage point. And that was obviously due to those price investments you made back then. So what have you done to sort of restore the gross margin in VLIS? Because I guess the price levels obviously aren't down currently.

uh first of all as we communicated last quarter and the quarter before that the way we look upon on on how to uh create a long-term sustainable profitability and growth is by by driving customer traffic loyalty and also volumes and that is actually what what you see in will is we have a good growth for customers we have good increase in loyalty and also good volume increases. But then also there are of course many other factors that are impacting the gross margin such as the customer mix, the campaign mix, the sales mix, So there are many factors that are impacting the gross margin and also the comparison. But of course, wheelies have a strong momentum. And as we talked to you last quarters, for us, we will never go up the price promise in wheelies as Sweden's cheapest grocery bag. And that's really key in the market position and the customer promise that we have in Willys. And that's how we also create long-term profitability to be correct in the price position, drive volumes and customers to our stores.

Okay, thanks. That's clear. And last one from my side. You say that you expect the efficiency gains of 200 to 300 in Bolsta to run through from Q2. Do you have an approximate run rate number as of Q1? So where were you this quarter you report?

Do you mean run rate in the efficiency gains you mean? Yes. We see a gradual improvement in Bålsta. You see also the development in Daga. That's due to both the good growth in Daga, but also increased productivity. So we will gradually see the improvements. In the Q1, we still have some extra costs due to the e-comm implementation in Bålsta. So, that we are now, how to say, optimizing, and that's why we also feel pretty sure about the efficiency gains going on forward. So, you see both the profitability improvements in Dargav for the first quarter, but also we have some extra costs due to Ecom up ramp. Yeah.

Okay, so it sounds like the sort of sequential improvements will be fairly significant in Q2.

Yeah. Okay, great. I would explain, I would say we see the operating, I would say the operating from the store logistics, we see a very good improvement and we will continue to see gradual improvements also in that part. And then we have some extra costs due to the e-com up ramp during the first quarter.

Yep, that's very clear. Thanks so much. That's all my questions.

Thank you.

The next question comes from Daniel Schmidt from Danske. Please go ahead.

Yes, good morning, Svane, and Anders. Good morning. A couple of questions for me. Just coming back to the stability of the Grosvenor new villas in the quarter, You referred to also a couple of quarters ago, you started to be more aggressive on price investments and that hit the profitability. Now you see stability in the gross margin. At the same time, you're also writing that RGAP's gross margin is slightly down. Is there any change to sort of the purchasing costs between villas and DAGAB in the quarter? Is that affecting sort of the gross margin of villas in any way or hurting the DAGAB gross margin or is that due to other factors?

Yeah, we have fixed business models. We do not change like quarterly like that. So what you see in DAGAB is also an effect of product mix that affects DAGAB's margin. So that could also vary by quarter, depending on seasonal effects. Now we have had Easter that's affecting the product mix, et cetera. So the Marding and Dagab could differ because of the product mix that they have and what they're selling.

Yeah. You said we had Easter. We didn't have Easter, you mean. Isn't that usually good for profitability? Isn't Easter, from a gross margin perspective, negative? Although it's good for sales, of course.

It's as margin always. It depends on the campaigns. It depends on the product mix. It also depends on weather, actually. So it's a mixture between, and also it depends on actually the calendar effect. It could also make impact on the margins, if we have nice weather or not, or if it's in April or March. So it's not like it looks the same all year.

Just maybe a follow-up on Citigrass. You were saying that you're introducing a more affordable customer offering from the end of April. Do you expect that to initially have a negative effect on profitability until you get sort of the gradual change of perception, or is that not a meaningful impact? How big is that investment, simply?

We are doing, as we said, we have an intense program in Citigrass working with different stream parallel, both the customer offering, the campaigns, uh price work at uh the uh brand and uh all in all we uh they are to to secure a good uh and now it's a profitable uh core in city girls over time as we told by the second half of 2026 And for that to do investing in the price worthiness, I would say, in Citigrass, it's really important to be able to attract and create an attractive customer offering.

And do you have any sort of plan or sense of how long that investment needs to be before you start to see you have a sort of a positive impact on demand?

It's always about both strategic and tactical, how we will carry out those investments. They have different purposes, both driving traffic, but also driving volumes. So that will depend. And we will, as we told before, 2025 would be a transitional year and we are going for profitability the second half of 2026.

And maybe just a last question. You are streamlining support functions. I think you mentioned cutting 60 people. Can you say when and how much this will affect the cost base and what sort of in terms of the cost out, of course, maybe for separate packages, but also savings long term?

It's too early actually to say anything about that. Today we have made the notes of terminations and we are at this time negotiating the new organization structure with the unions. So we will have to come back to that when we know.

But you think this will be clarified before the summer?

It's too early actually to say that, but the aim of what we're doing this is to actually accelerate the Axwood model where we have different formats brands meeting the customer and working in the back ends to be as efficient as possible to create synergies and and here we see potential to strengthen how we collaborate both within and between our different companies in the group to increase the productivity but also to get improve our customer meeting actually okay could this follow up on that is this aimed more towards city gross organization or is it across the board It's across the company, across the entire group.

Okay, thank you.

We're looking into the function HR, economy, communication, sustainability across all our businesses.

Okay, thank you.

Thank you very much.

The next question comes from Gustav Hages from SEB. Please go ahead.

Thank you, some followed. Good morning. Just, could you just, so that I got it right, is it correct that there's no correlation between the stabilization of gross margin in Willys and the lower gross margin in Dahlgaard? Is that what you're saying?

Yes, I could, how you say, no, there is no correlation. Okay, okay.

Thanks, that's clear. And then when you think, I understand that there's a lot of moving parts in your idea how to turn around the CT graphs, but just, well, before that, 80 million losses now in Q1. Is it still your view that you're more in a run rate of 200 million losses for the year rather than what the extrapolated number would be closer to 300 million?

No, exactly as you said, 80 million is in line with last year's first quarter. And then you should also know that last year we had Easter and the hypermarket segments are a little bit more affected by the Easter than we are traditionally used in this counter and the traditional food market. So last year they had the same profitability the 80 millions are in line with that and and then we had and this year we have a calendar effect on top of that so now we don't see any 300 millions.

Could it even be so that you break close closer to breaking even then if Citigrass in Q2 to get the bridge

As I said 2025 would be a transitional year and we are going on the second half of 2026 to reach profitability. I mean for us it's now it's all about creating a really strong core, create an attractive and a modern store concept to take up the competition in the hypermarket segments with Ike Maxi and Stora Coop and we are building this from on a strong basis and on a platform to then grow from.

Sure, but could you please help us a bit more granular in terms of what the split is to reach break-even for Citigroup? So I understand you will not give me all the numbers, but let's say that the store closures is one part, right? And then is there also one part that stems from a more competitive procurement prices from DAGAV that is part of this 200 million bridge to reach breakeven? And how much is actually through organic contribution to the earnings in that bridge?

The majority for us now is to get growth in the like-for-like sales. Without growth in like-for-like sales, we will never be able to do this journey that we're on. So our focus is to create like-for-like sales and also focus on the cost. And that is why the implementation of a chain operational model in Citigroup is really important to get real operational excellence in the operations. So strong focus on costs and also creating a really attractive customer offering and customer meeting that will create the like for like growth. And then Dagab's role is always to create and support all the brands in the best ways in their negotiations and both in having an attractive assortment, but also right prices from our suppliers. And that consists for all our formats and customers.

Sure, but now that CityGhost is a part of your fully-owned format, they will more likely be able to have a better negotiation point with Daga than before. Is that how I should interpret it?

You know, we're not negotiating between our formats and Dagab. We are, as you said, we're integrated and Dagab's role and purpose is to create a really efficient and attractive customer offering for all our chains, no matter if it's Willys, Hemsjö, Citigrads or our external customers.

Okay. Yeah. All right. Thank you.

Thank you.

The next question comes from Rob Joyce from BNP Paribas Exane. Please go ahead.

Hey, good morning. Thanks very much for taking the questions. Good morning. First one, good morning. Just sorry if I missed it, but would you, just to help me understand, what's the difference we're seeing at Willies this quarter versus the third quarter of last year in terms of that margin performance?

Yeah, it comes back to having a good life for life growth, but also, as we say, how to optimize sales mix, campaign mix, price mix, good cost control, good operational excellence. But the major part is actually, as we said, we create long term the sustainable growth and profitability by driving customers to our stores, improving loyalty and also drive volumes.

Okay, was that very different in 3Q last year? I guess I'm trying to work out what to think about for the rest of this year and going forward. Is this year now a year of margin improvement at Willys, given the easier comp? Or is there something specific in this quarter we need to think about that won't be repeated in coming quarters?

On one hand, we don't give any forecast on our margin or growth. But on the other hand, the last quarter, last year, we also communicated that it was lower than we are used to.

Okay. Okay, so we think of last year as more anomalous than initially.

For us, as we communicated last quarter, it's always about driving long-term growth and profitability. And if that means that we, like the third quarter last year, had to invest in one quarter in price, then to secure the price position, that will always be key for us to keep our promise to our customers.

Okay. So would you say competition has got easier in the first quarter of this year? Has it eased off on a relative basis?

No, we still have a really high competition in our market. But as you said, it depends on market dynamics, but we still have a really high competition in the market during the first quarter from all our competitors, I would say.

Okay, understood. And then just on city growth, just a few questions you could help me understand. Two quick ones. Firstly, sorry if I missed it, but you referenced the first quarter losses last year. What were total losses at Citigroup last year, please?

It was in line with this year.

For the full year? No, for the full year 2014.

Full year, sorry, 200, around 200 minus.

Historically, where is Citigroup? What's this kind of high level of profitability? What was it making in its sort of heyday or last five-year peak?

Around 2%. 2%.

Okay, and final one, just in terms of the price cuts you're doing, what do you think that will improve the average basket buying?

For us, it's important to have a good price value to be price valuable in 60 yards. And we create that, of course, with prices, but it's also about having attractive campaigns and store formats and also sales optimizations. So for us, It's key to build a priceworthiness now in Citigrass that actually was a little bit lost during the last years. And we have to come back to that. To be an attractive hypermarket actor, we have to have a good price perception of price value.

Okay, so what are you looking to improve that by? Just roughly to give an idea of the sort of movement in that metric you're looking for?

Sorry, could you repeat that? I didn't hear, sorry.

I was going to say, is there a level we can think about how much you're looking to improve that by?

You mean the buy from the customers?

Well, the price value, if there's an index we should be thinking about.

Yeah, that's an important thing. To bring back the customers and drive loyalty and volumes, it's important to drive the life growth. And this is key to be able to start to grow life for life, to win back the customers and create a strong loyalty. So it's key for us to strengthen the price perception in Citigrass.

Okay.

All right. Thank you. And I mean, we talked during the autumn when we decided to invest also and to secure the price position in Willys, we explained that this is really key. And we've seen actors both in Sweden and in other markets that lost their price position and how How that has become an expensive and long-term way back. And that's actually what we are seeing here now. So we have to gain back our customers. And by that price, worthiness is really important. And that's also why we're focusing on operational excellence in the store and cutting costs. So we can invest in our customer meeting instead.

Thank you very much.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

So thank you very much for joining us today. I look forward to meet you next quarter, but also on our capital market day in September. So have a nice day.