Have you considered that a company’s reporting period can be compared to shooting dots on a target with a bow and arrow? Probably not…
The long, quiet period until report day. A slow, silent movement where you slowly tighten the bow string. The market makes its assumption but no one knows the actual outcome. I’ts quiet. The wind is still.
Then we land in the morning before the report is released. The short period of total focus where no new momentum occurs but the bowstring stands in total stillness. Waiting…
After that, everything happens at a tremendous speed. The report and the string are released and the entire reaction becomes a fact. You miss it, or it happens Bullseye? The spectators, i.e. the analysts, find out whether their assumption was false or true.
As many know, I’m pretty bad at comparisons, and this was probably no exception.
However, the report day yesterday was crap (except for Atlas Copco). There was an extra lot of shares in Handelsbanken, which yesterday had its worst price reaction since the 1990s if I read correctly. But maybe today’s reports will land more in my favor. Axfood will soon release its report and this is one of my biggest companies in the portfolio
Axfood 07:00
If you are hoping for substantial price movements upwards upon report, then Axfood is probably not your company to own. At the same time, you are reasonably protected against a large downside. There is little risk that the reports contain nightmare scenarios.
In a way, you can say that Axfood is somewhat the opposite of JM, which I wrote about earlier this week. The difference in volatility is palpable.
The biggest movement we saw was when interest rates started ticking up and investors realized that the public would have lighter wallets and seek out cheaper grocery stores. Then it became crowded in the door; both on the stock market but also to Willy’s stores.
The adjusted operating profit for Axfood came in a little higher than analysts expected. Turnover was slightly lower. But yes, it feels like Axfood is easy prey for the analysts who want to get their forecast right.
Net sales increased by approximately SEK 1,000 million from the first quarter of 2023. Unfortunately, in this case too we must include the Easter effect where Easter landed early this year. Personally, I think that Easter has become some sort of mini-variant of Christmas. I don’t remember that we bought and ate so much Easter food as children, but now it is seen as a matter of course to put the calorie intake on the plus side.
Food inflation during the quarter was only 1.4% (according to Statistics Sweden) and apparently it was even lower towards the end of the quarter. The fact that Axfood still manages to maintain its results despite food prices not rising is positive.
Also for Axfood, a new CEO is on the way. Their new CEO will take office in August and is called Simone Margulies. She has worked within Axfood for 8 years and was in management for 4 of those years.
I myself have stopped speculating about whether a new CEO will do a good job or not. It can look as good as it wants but still end up in a bit of a disaster. For Axfood, it is difficult to put such a company in extreme turmoil, although nothing is impossible.
Axfood’s new CEO Simone Margulies
