Hello and welcome to Axfood AB Q2 Report 2020. Throughout the call, all participants will be in a listen-only mode, and afterwards there will be a question and answer session. I will now hand the word over to Alexander Bergendorf, Head of IR. Please go ahead with your meeting.
Thank you and good morning. This is the Axfood second quarter 2020 telephone conference. With me today are Klas Balkow, our President and CEO, and Anders Lexmon, our CFO. In the investor section of our website, you will find the presentation for today's call, which is intended to be viewed in conjunction with our prepared commentary. We encourage you to follow along with that presentation. After our prepared commentary, we will be taking questions. A recording of this call will be made available on the Axfood website. I will now turn the conference call over to Klas. Please go ahead.
Thank you, Alex. Let me also, of course, welcome you all to the presentation of Axfood's interim report for the second quarter 2020. Let us start by turning to the next page number two. Here you'll find the agenda for today. First I would provide an update on the development in the overall market, and then we'll go through the second quarter for Axfood. Anders will then present the financials and give you an update on our financial position. Our presentation concludes with the outlook for 2020, and then as normal, we will end the telephone conference with a Q&A session. Please now go to next page number three.
Before we go into the second quarter, just as a very quick reminder for you who don't follow us on a daily basis, we are a leading food retailer in Sweden with a clear house and brand strategy, with a vision to be leading in good and sustainable food. We have a family of successful and distinctive food concepts that rest upon a close collaboration. Our rolling 12-month sales is now more than SEK 52 billion. Please I ask you to go to the next page number four. On this slide, I would like to take the opportunity and share with you that actually in this quarter, Axfood celebrated 20 years as a company. The journey began long earlier, as you may know.
The first Hemköp store opened up 1958, and Willys predecessor, LL:s Livs, with, as they call it at the time, ridiculously low prices, was started in 1975. It's fair to say that we have had a successful journey over all these years. If you look at the compounded annual sales growth of approximately 3% since 2000, but since 2015, our compounded annual sales growth has been approximately 5%, a period where we have clearly gained market shares. Let's now turn to page five, and let me go through the recent developments in the Swedish overall market. Please go to page six. We have, as you all know, an exceptional time with an overall strong market growth within food retail at this time. We've also seen some clear accelerated online sales behind the pandemic that we've seen and that we are facing at the moment.
Consumers have, to a higher degree, opted to eat more at home, and as a consequence, we also see in a weak demand in the restaurant market. I have to say, while growth in the food retail market in general is strong, the situation is challenging also within certain segments of the food retail market, as an example, in stores in central urban locations as well as on the cross-border trade. If we then move on to page number seven, that presents our monthly growth for the whole Swedish market. As we talked last time, March came out as a very turbulent month, and as we then presented, there was a significant hoarding, but that we're all pleased now that has phased out. In then the second quarter, growth has stabilized at an overall higher level than before the corona pandemic broke out.
We've seen a clear market growth the last quarter particularly growing from in April and then moving up in May and June. If you go to page number eight. The growth has also accelerated in the online channel in the second quarter and continued to grow. In March, more or less all players in the market was not able to manage the fast increase in demand, while all players in the market has then gradually built up its capacity. The growth online compared to a year ago has now been above 100% for the last quarter. We've seen a significant uplift in this segment as of time, and I will come back with a bit more comments on that. Let's now turn to page number nine, as I would now like to go through Axfood's development in the second quarter.
Please then directly go to page number 10. First some overall summary comments. I have to say that we still find ourselves in a turbulent and exceptional time. The Coronavirus has had and will continue to have a major impact on our society and also on our operation. For Axfood, the second quarter marked a strong achievement despite, I have to say, challenges within certain parts of the organization, with strong growth and maintained profitability. The very strong development within certain parts of the company where I have to say the growth rate for the Willys stores is particularly noteworthy. It was compensated for those parts of the company that had been dramatically affected by the Coronavirus. We're also seeing an accelerated growth in our business for our e-commerce, and we continue to make strong progress for a more sustainable future.
I'll give you some more comments on that later on in the presentation. Please now go to the next page where we'll start to go into our key ratios, and I'll start with sales on slide number 11. Our consolidated net sales grew 4.1% during the quarter to SEK 13.6 billion. We have not seen any significant calendar effects, however, we, as everyone else, observed a positive effect on food retail coming from people staying at home and consuming more food at home. We noted a high and an accelerated growth for Willys Stores compared with the first quarter that was partly offset by a sharp drop in sales for our cross-border grocery chain, Eurocash. I'll come back a little bit more on that with more details on Eurocash later on, but wanted to remind you all that Eurocash is part of the Willys segment.
Hemköp grew almost in line with the market, that was also despite sales for the group-owned stores were impacted by significant less customer traffic in central locations in larger cities. The challenging quarter we see in for Axfood Snabbgross that we commented on in the first quarter, you're seeing that is continuing, that we've seen a weak restaurant market, so sales for Snabbgross is now down 7% versus last year. If we then go to page number 12 and looking how we are comparing our growth versus the overall market. If we look at our store sales, we continue to gain market shares. As I said, this is then achieved despite the headwind from Eurocash. As in our sales data, we have Eurocash is part of our sales data, while in the market, the majority of the competitors is not.
That's fair to comment on that. Our growth amounted to 8.3% in the quarter, which compare then to 8.1% for the overall market. If we then go to next page, page number 13. Our online growth accelerated and came in at 128% growth versus last year. Also here, we outperformed the market as market growth amounted to approximately 113%. We have worked to expand our capacity in this period and particularly see a very positive growth in our click and collect operation. Let's now turn to page number 14 and look into our operating profit. We report a slight increase in our operating profit, but at a somewhat lower margin. The profit growth was clearly supported by strong like-for-like development and also higher operating profit for Dagab behind improved efficiency.
Several of our businesses experienced a challenging time due to effects from the Corona, including Eurocash, Axfood Snabbgross, and Urban Deli. This has been a negative effect on our operating profit. Sales in the online channels were accelerated. We consequently have higher costs related to that, including higher personnel and logistical costs. We also have in this period invested to drive growth in our pharmaceutical business, Apohem. All in all, operating profit came in at SEK 605 million , which is up approximately 1%. If we move on to the segmental reviews, I'll start with our largest segment, Willys, on slide 15. Have to say, a very strong quarter. Sales growth of almost 9%, clearly outperforming the market with a like-for-like growth of 7%. Particularly note that in this segment, it includes Eurocash.
We've seen accelerating growth for Willys Stores, positive effect from higher consumption at home. A very strong growth online, and we continue to roll out our online offer to more stores and more cities, particularly behind our click and collect offer. We have, as comment now a few times, lower sales on Eurocash as cross-border shopping has essentially come to a halt following Norway's imposition of travel restriction to Sweden, which significantly dampened growth for the segment as a whole. Sales for Eurocash fell by more than 80% compared with the same period a year ago. Despite that, operating profit growth of 6% with a slightly lower margin at 4.8%. Operating profit driven by strong like-for-like, particularly then offset by loss for Eurocash and higher personnel costs, largely due to higher share of our online sales.
If you turn to slide number 16, and let me make a few more comments on Eurocash. It has been, as you may understand, a challenging quarter. Overwhelming majority of our customers, they come from Norway, so that has made a clear impact due to the closing of the border. We also have some significant seasonal effects as Easter and summer is very important for our business in Eurocash. To give you some numbers, Eurocash represented approximately 5% of sales within Willys segment in 2019.
While we have tried to reduce costs to mitigate the effects of the sharply lower sales, a significant part of the cost base is still there, such as rent and some staff costs as the stores are still open, as we want really to be ready when restrictions will ease and the border will open up. While majority of our employees are also on short-time work, we have so far not applied for the government support behind this. As a consequence, significant loss for Eurocash in the second quarter. Clearly we hope the border will open up soon to all of Sweden, not only as it is now for a few regions. With having said that, obviously, if you look at the Willys' performance outside Eurocash, it has been clearly a strong growth and clearly gaining market shares. Moving on to Hemköp on slide number 17.
Total sales increased 7.6%, supported by very strong growth for our franchise stores, where they also clearly gain shares. Like-for-like came in at 4.3%. In Hemköp, obviously a positive effect from higher consumption at home. Also the growth for our group-owned stores was hampered by less customer traffic in central urban locations. We have seen a clear challenging situation for certain of our stores. We report higher operating profit at SEK 53 million, which is basically a flat margin. While the earnings were positively affected mainly by higher like-for-like, in the group-owned stores, but weighted down by cost for handling and also the e-commerce expansion. We are increasing our capacities in Hemköp, which then drives some higher staff costs similar to we've seen in Willys. The amount of people in central urban location have decreased significantly during the Corona pandemic.
On page number 18, here we find the data in the charts to the left that has been compiling using aggregated information from mobile networks. That shows that in the movement in the city centers in Sweden decreased by 24% in March and by 40% in April. The locations of our group-owned stores are skewed more towards city centers than comparing to our franchise stores. If you look at our group-owned stores, half are then located in what we call flow locations, i.e. locations in city centers with a low relative share of housing. Looking at the franchise stores, only a fifth are located in such locations. In summary, our group-owned stores are more impacted than our franchise stores when it comes to traffic pattern in city centers and also then consequently more impacted by the current situation. Let's now go to page number 19.
In this time, I would like to say something about Tempo, our mini-mart format that is part of the Hemköp segment. We are not operating any of our Tempo stores ourselves but has franchise collaboration with 126 independent Tempo retailers. They are slightly smaller assortment and retail space, obviously, than Hemköp, and are mostly are located in countryside communities or suburbs of major cities. It is an important contribution to thriving countryside, as they often also offer services such as package pickup and pharmaceutical sales. I have to say, I'm glad to see a very positive development for Tempo in this period and also in this quarter. Sales is up 14%. Moving on to Axfood Snabbgross and on page number 20.
Well, as we have commented also in the first quarter, it has been a challenging time and also a challenging quarter where our sales were down 7.1% or like-for-like, down 8.3%. We are clearly obviously hurt by the weak restaurant market. I have to say also, it's been a gradual improvement over the quarter that was now, we've seen a clear effect due to some of the easing of the restrictions and also think by favorable weather conditions in the end of the quarter. With that said, it's been somewhat difficult now to forecast the rest of the year. It's for sure worth mentioning that the development for Axfood Snabbgross is clearly better than for the overall market as a whole. As you know, café and restaurant business in general are suffering more than 7% during this period.
Our operating profit and margin significantly lower at SEK 34 million and the margin at 4% due to obviously then the negative like-for-like development. If you then go to page number 21. During the recent months, Axfood Snabbgross has temporarily opened up half of its stores to consumers. We have done this behind two clear reasons. First, we want to provide the consumers with an additional place to shop groceries during the corona pandemic. Secondly, this is also an opportunity to mitigate the negative effects on the business stemming from weak demand in the restaurant market. I have to say so far, however, this has marginal impact on sales. We now will continue this at least until August. We will evaluate this and see if there's a strong demand, we can extend this opportunity to December.
Let's now move to slide 22. I would like then to go through Dagab. We noted a higher delivery reliability than we had in the end of Q1, even if I also have to share that we are not really where we exactly want to be, but it's a clear improvement, and we have seen a very positive work with our suppliers to handle this increased demand. Sales growth of 5.6%, which is then driven by strong sales to Willys and Hemköp. We have some negative impact from lower sales to Eurocash, Axfood's Snabbgross, but also from convenience retailers, which also has been affected by less people moving around, obviously. The negative sales growth is also impacted from Urban Deli. As you know, there is also the restaurant business is a challenging time. We have a positive development for Mat.se despite the closure of Malmö dark stores.
We've also done some clear efficiency gains at our dark store operation in this period. We report higher profit for Dagab at SEK 189 million, which obviously is an effect of the improved sales growth and also efficiencies, which has been positive in the wholesale business. Also we have costs related to a significant increase in our e-com and then e-com logistics driving more costs, but also costs to support growth in Apohem and a clear weak result for Urban Deli. Go to page number 23, I would like to talk a little bit more about the online segment of the food retail market and particularly how it looks for us. As in many other trade sectors, online sales has now accelerated during the pandemic. We have clearly experienced a high growth and also pleased to say, outperformed the market.
The pandemic has prompted more and more people to shop online, and there is a steady stream of new customers coming in. If you look at the chart there, more than half of the growth in this quarter compared to a year ago was driven by sales from new customers. Also interesting, older demographics, nearly a fourth of all orders in the second quarter were placed by customers older than 70 years, which is up from only 4% in the first quarter this year. The key question obviously will then be how this new customer group will act when the pandemic is over. In any way, we continue to drive our strategy to be flexible and open for changes in demand. On page number 24, we highlight some recent initiatives to strengthen our offerings online.
We've done co-delivery of groceries and pharmacy products via Mat.se, which is an exciting collaboration that will become even better now when Apohem move to our common dark store in Stockholm this autumn. Willys continue to expand mobile click and collect now, we are offering that at four Circle K gas stations in Stockholm. It's early days, but very positive feedback from our customers. Also happy to report that Hemköp has accelerated its online expansion, and we are clearly increasing our capacity. We are now in 30 stores, which is nine new stores in the second quarter compared to the first quarter this year. Let's now turn to page number 25. As at the same time that we have devoted efforts to meeting new needs and behaviors, we have continued to work on our sustainability and taking steps toward developing our business for the future.
Some recent initiatives you find here on the slide. This autumn, we will be first in Sweden to offer eggs from free-range hens that are fed soya-free feed. We have continued our work on reducing the use of plastics. Measures has now been taken during this period that will contribute to a reduction in yearly use of plastic by more than 25 tons. All in line with our target to reduce use of plastics within our own operations by 25% by 2025. We're also working continuously with food innovation, and during the quarter, our own label, Garant, launched three unique ready-made meal solution based on Swedish-grown legume mince. With this, please turn to page number 26. With that, I hand over to our CFO, Mr. Anders Lexmon, who will present our financial position. Anders, please go ahead.
Thank you, Klas. Let me then first sum up the first half year, we turn to page number 27. Net sales for the Group increased with 6.7% to SEK 26.6 billion. Store sales for the Axfood Group increased by 9.9%, that's compared to the market, 8.6%. Means that we gain market share in the first half year. Operating profit increased with SEK 62 million or 5.7%, the operating margin decreased somewhat from 4.4%- 4.3%. Let me then continue with the cash flow on page 28. The cash flow for the first six months had again a stronger cash flow from our operating activities compared to previous periods. The operating cash flow amounted to nearly SEK 2.2 billion and was SEK 389 million higher compared to last year. SEK 102 million of that was explained by a positive effect in the net working capital.
The positive effect we saw at the end of Q1 due to the hoarding is now erased, but the strong growth helps us to be more efficient in our inventories, both in our warehouses and in the stores. As we grow our business, we also continue to see improvements in our accounts payable. We also, in the second quarter last year, did an additional tax payment that we didn't do this year, which also explains the improvement in the operating cash flow. As I mentioned in the first quarter annual meeting in March, we decided to divide the dividend into two, one payout in March and one in September, which also explains the positive effect of approximately SEK 730 million compared to last year.
On the negative side, we had higher investment this year, that is explained by a divestment of an asset hold for sale last year of approximately SEK 100 million. If we turn to the investments on page 29. For the first half year, that amounted to SEK 497 million and was in line with last year. The investments in our retail operation was up SEK 40 million due to some higher pace in the refurbishment in our stores. We also saw some higher investments in IT this year compared to last year. Also that due to more store refurbishment, but also higher investment in IT projects during the first half year. The wholesale investments decreased somewhat due to the investment in our warehouse in Jönköping last year.
If we then turn to page 30 and look at our development of our net working capital, we can see that we in the second quarter further decreased our net working capital compared to sales to -3.1%. As I mentioned before, we managed to be more efficient in our inventory due to the strong like-for-like growth, and we also continue to increase our payment terms for accounts payable. Let's then turn to page 31 and take a look at our financial position. Looking then at the development of the net debt at the end of June, we had a net receivable position. If we exclude IFRS 16, and that amounted to SEK 478 million, that's the dark blue slice within the chart.
The strong position at quarter end is also mainly explained by the lower dividend in the first quarter, also from a strong operating cash flow in both the first quarter and the second quarters that we see earlier. The net debt, EBITDA ratio decreased somewhat compared to the first quarter and was 1.1 at the end of the first half year. The equity ratio was in line with last year, around 20%, and even though only half of the dividend was paid out, the equity was impacted of the full dividend at the end of the quarter. The dividend that will be paid out in September was recognized as liability at the end of June. Let's turn to page 32.
The capital employed was impacted over the dividend in the first quarter and decreased to the same level as at the end of the second quarter last year. The development of return on capital employed has now decreased from 40% at the beginning of 2019 to approximately 25% now due to IFRS 16. Finally, we can conclude that Axfood continue to invest in the future and at the same time have a strong cash flow and a solid financial position. With that, I end my end part of the presentation, klas, and hand over to you again.
Thank you, Anders. Let's now please turn to page number34 and looking into our outlook. We have no changes to our 2020 outlook. We plan to invest SEK 900 million-SEK 1 billion this year, excluding acquisitions and leases. We don't forecast any major investments this year in our automation project for the new logistical center. We plan to open up 5- 10 new stores this year, and we already have five new stores so far in this year. Let's with that, go to page number35, and let me sum up this presentation. We continue to work hard to meet the changed consumer behaviors and the increased demand in very special times. I would like to say that we performed well in the second quarter and grew more than the market despite the challenges we faced in part of our business.
I must state it has been a remarkable achievement, particularly in our Willys chain. Looking forward, we are really well-positioned, but we have continued challenges, particularly in Eurocash and Urban Deli. Our financial position is strong, and we also have sight sets on the long term to further strengthen Axfood. With that, I please ask you to turn to page number36 and hand over to the operator to open up for questions. Thank you.
Thank you. If you would like to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. That is zero one if you would like to ask a question. Our first question is from Daniel Schmidt from Danske Bank. Please go ahead, your line is open.
Yes. Good morning, Klas, Anders, and Alexander. Couple of questions from me starting with the Willys and Eurocash. Could you shed some more light on the loss in Eurocash? What would the underlying Willys EBIT be if you take out Eurocash?
Good morning, Daniel. Well, I think we've been guiding around that in terms of the turnover for Eurocash and we also have commented earlier on that Eurocash is in line with our profit in general. With that, I think you can a bit calculate that we are not only now not having the profit, but we're also having some significant losses, obviously, with no turnover and the stores are still open. We're not guiding it in terms specifically, but it has been a clear impact in this quarter.
Would it be fair to assume that that could be around SEK 30 million-SEK 40 million in negative for the quarter?
It is significant.
All right. Of course, it's not in your hands, but the Norwegian government was out the other day opening up for three parts of Southern Sweden that was open for the Norwegian border. Do you have any expectations or insight into when the rest of Sweden could be out of this Norwegian border closure thing?
Well, I think that I don't have any more insights than we all have in terms of that. I think that there's at least a good dialogue right now between the governments as I've understood it, and I think it's important that that dialogue continues and that the government now is trying to sort this out as quick as possible. I think they've been fairly clear in Norway in terms of what they would like to see in terms of some measures. As you know, yesterday, we heard that some of our measures in Sweden is clearly going in the right direction. The only thing I can say that I hope that the border will open up as soon as possible.
Yeah. Of course. Are you seeing the same trend in start of Q3 as you saw by the end of Q2 in terms of this particular issue?
No. I'm not really commenting on the Q3, obviously when it comes to the border part, there is no changes. Their border is still closed, we still have a, not a full, but almost a full stop in Eurocash business. We are taking the decision so far that we want to be ready and we want to have our staff ready, we want to have our stores ready, we want to be in good conditions as soon as the border open up. We hope it will not take too long time.
No.
We don't know, and I think it's fair to say that, and we want to be clear on that we are in this situation. I think we are, if you look at still the segment in Willys is doing really well, and obviously that is a consequence of that Willys is performing really well in this quarter. Obviously we want to see now that Eurocash is open up as particularly it's also obviously it's a seasonal business as well, where the summer period is soon over, which is not so positive in that perspective.
Sure. Understand. Jumping on then, online growth is of course extremely elevated, and you're saying that growth has stabilized for the entire group at a higher level. What conclusions do you draw from that when it comes to store expansion? Do you feel in any way that you need to revise your store expansion plans given the online growth that you're seeing?
I think that it's fair to say, Daniel, that we've seen a significantly increased demand now on online. I also comment that on some of the slides that we showed that there's a high inflow of new customers, particularly elderly customer that comes in. The question obviously, what will they do when they can go out in the stores again? It's fair to say, I think, for us, the omni-channel structure is important, and if you actually look at the growth rate from the physical stores, it's significantly higher than the growth if you talk numbers, not percentage points. We still have a positive development in our stores. The combination of online and stores in terms of our click and collect operation is important. We still see opportunities to further invest in our stores.
At this stage, we have common dark stores or dark store operation in couple of large cities. When you look at the countryside in general, we don't forecast at this stage that we will have dark stores. There where the stores will work as picking stations for the online business. Particularly then the click and collect is also interesting as I think the click and collect business now is really driving the growth.
Yeah. When you say stabilized at a higher level, where are we, do you think, in terms of the two trends, eating at home versus the decline in HORECA? Of course, HORECA has probably been coming back a bit towards the end of the quarter. Could you shed some more light on that?
Well, I think if I look and if I hear, I'm not sure that the overall HORECA. I think we have probably seen a little bit more positive effects from Snabbgross than the overall market. That's our assumption at least, which is related to that Snabbgross business model with stores where you can quickly go and fill up and you can quickly be more adaptable to the changes. We've seen, as I shared, a more positive development in the end of the quarter in Snabbgross. The quick questions which I think everyone is now asking, how long will the pandemic continue and when will we go back to normal? I think so far at least that even if we start to open up more and more, I think it will be a gradual improvement to go back to normal, that will take some time.
I think we'll still have some restriction in terms of how close we are sitting next to each other, which means that the capacity in some of the restaurants will be more limited versus before and so forth. It will be a gradual improvement. That's my best guess at this stage, but I don't think anyone really knows.
No. Okay. Just finally on food price inflation, I think that you wrote it was 3.3% in the quarter. Was it a bit higher at the start of the quarter? Is that correct?
We noted it was a bit higher, particularly related to the weakened Swedish krona, and related then to fruit and vegetables. It has fallen back a bit as the krona has strengthened as well in the end. That's correct.
Okay. Thank you so much.
Thanks.
Our next question is from Magnus Råman from Kepler Cheuvreux. Please go ahead, your line is open.
Thank you. Firstly, I have some more questions on the online side. You mentioned, of course, a very strong online growth and somewhat above the Dagligvaruindex, do you deem that online growth would have been even higher if you had greater delivery capacity, i.e., that it's delivery constraints that have set this number? The same goes perhaps for your remarks about click and collect growing faster. Would that perhaps be explained by higher capacity there than in home delivery?
I think it's a fair assumption. Obviously, if I look at, as I commented as well in particular when it started in March, April, the fast increase you noted from us and from I think the rest of the market as well, that the delivery times were not where we wanted to be. We have increased our capacity and built that up. I'm sure that with particularly some of our dark store operations in general, we could have had an increased volume because we still had some days that within the capacity had been full. At the same time we also adding more stores and more click and collect solutions and seeing a positive effect out of that. If we've gone even faster, obviously that would've been increased as well. It's probably a fair assumption that we still have some capacity constraints here in this period.
I mean, in light of these conclusions, and perhaps also what you mentioned about new customer groups coming on to this platform, and perhaps it's fair to assume that they will not altogether halt their behavior after corona. In light of this, do you see the need for you to alter your strategy on the build-out of delivery capacity? Do you see perhaps any changes on or acceleration to the Bålsta build-out or any additional transform dark stores? I mean, you mentioned a few initiatives here in the presentation, but do you think that there will be more sizable actions, so to speak, specifically from your side?
Yeah, I understand. I think we've been all the time very clear about that we want to have a flexible operation, a flexible system and seeing so we can adapt quickly both to increased demand and if it then, as you point out, we don't know what the new customer base that is now coming in, how they will handle and then be flexible on that. What we have though, increased, as you know, is the capacity in our operations in Stockholm, and that we are planning to build that out now in the fall. We also are continuing to build out capacity now for our click and collect operations, speeding up Hemköp significantly and Willys. They've done that for a while now. They continue to drive that agenda.
That part of click and collect fits us fairly well because obviously we are then flexible if the consumers chooses to go online, they use the same store. If they go physical, they use the same store. In that perspective, we are having a flexible operation, so it doesn't change. When it comes to your question, can we speed up Bålsta? I think we have a full speed on that. It's a big project and we don't forecast any opportunity to speed that one up.
Right. Sure. Just finally on the online side, given the very high demand here, do you see a shift here in balance in terms of the opportunity to charge for delivery, especially for home delivery?
I state that all the time. I think if you look at the overall market, delivering home for free, it is a challenge. We are actually, if you look at Willys, they charge for home delivery, and then that model works really well. Obviously, they have a very attractive price point from the beginning. I think if you look internationally and so on, you start to see that there will be more delivery fees, particularly when it relates to delivering to your home. We'll see how this develops. Obviously, it's a competitive landscape as you point out, but also look at some of our brands today has a clear fee structure and it works well.
That's very interesting. Just moving on just to the Snabbgross business. Sales add up surprisingly well. It was clearly above consensus expectations here, but nevertheless, results fell sharply. Can you elaborate a little bit more on that for us to understand? Firstly, was there any meaningful impact on this initiative to launch business consumer sales and perhaps lower profitability on serving such sales or have you maintained completely unchanged staffing in the Snabbgross side in Q2? I'll stop there.
I think I even pointed out the open up for consumers has limited impact. It has some impact, and we are pleased with that, but obviously it's early days and it takes time for a consumer as well to find. There's two parts of that. One is also to open up this and to get the opportunities now to support the communities with more places to shop without having to spend time with other people, so to say. Also when it comes to, I think as in any retail business, when you drop sharply in like for like, obviously it has an impact on everything. When we look at our customer base, we've maintained our customer base in Snabbgross. They are more frequent though, which means that they are still there.
They're taking staff's time, so to speak, while they're still shopping a bit less, due to their own demand is not as strong. I think if you look at Snabbgross' business model, they are geared up for shoppers who can go on a daily basis to evaluate what the demand will be today or next day. That fits that model fairly well, and we are pleased to see that we believe we are clearly gaining market shares now in this market. Even if we are making some losses, we are pleasing our customers to make sure that we have a sound and steady operations for them, that for the restaurants that is actually going through a challenging time.
That definitely seems to be the case. Then on the remarks that sales improved gradually over the quarter, does that also hold true for results? Are we nearly back at flat run rate when we go out of the quarter? Yes.
We'll see when. Obviously, as you know, profit is very much dependent on like for like development. If the like for like is improving, I think the profit is supported by that. Initially, as stated when we had a 20% decline in our sales in the end of first quarter, obviously that is hurting more than in the end of the quarter. That's a fair assumption.
Thank you.
Thanks.
Just as a reminder, if you do wish to ask a question, please press zero one on your telephone keypad. Our next question is from Fredrik Ivarsson from ABG. Please go ahead, your line is open.
Thank you. Excuse me, I want to get back to Eurocash one more time. I appreciate that you don't want to guide on the losses, it seems like underlying margin in Willys is expanded by at least 50 basis points according to my calculations. Is that all owing to volume or do you see any other drivers for that margin like mix or efficiency gains, for example?
No, I think it's fair that if I, which I've said now between the lines several times, that Willys has had a fantastic performance with a very strong like for like, and obviously that is supported or that supports and helps the efficiencies, that supports and helps the cost structure we have. With that strong like- for- like, my expectations is that you're also getting improvement in profitability, which we're also seeing.
Okay. No positive mix effects or anything else?
There's no major changes in this quarter, no. Yeah.
Sure. Second question also on Willys. Strong like for like, obviously, it seems like equal like 13% ex Eurocash. That's obviously a very strong outperformance versus the market. Now you're facing a somewhat different quarter, with vacation or staycation you mentioned a couple of times. How do you think Willys is positioned given that? Do you expect the outperformance to come down a little bit as consumers head out to the summer houses? What's your expectations on that?
Well, I would think we will see when we come back in October. I think in general terms, Willys is well spread out in Sweden. There's also now some uncertainties in the overall economy in general for consumers. We are seeing a higher unemployment rate and so forth, obviously Willys is extremely well-positioned now as a low price retailer. I think that is also supportive in then obviously combination with the dedicated to stay home time.
Yeah. Fair enough. That's all from me. Thanks for answering the questions.
Thanks.
Thank you.
Our next question is from Gustav Hagéus from SEB. Please go ahead. Your line is open.
Good morning, guys.
Good morning.
A few questions if I may. Firstly, I'm looking at the minorities impact on earnings. It was SEK 9 million positive in Q2 2019, swinging -SEK 19 million, so a SEK 28 million swing towards the negative. Does that mainly relate to your Eurocash holding, or is it a big impact also from Urban Deli and other parts of your business?
In the scale part, obviously Eurocash is the largest impact. When you come to Urban Deli, which is part of Dagab, we have a clear negative impact, but we've also been able to so to say, take down costs as much as we can as it's been almost a halt for a time there and then we are trying to handle that as good as we can with the staff and so forth. Obviously we also have the rents and we have the operation still up and running. The majority here when it comes to the scale of sizes is Eurocash.
A fair estimate again would be SEK 30 million-SEK 40 million loss for Eurocash on a constant basis in the quarter, no reason for any other beyond that then?
No, we don't comment that, but it's been significant. Yeah.
Okay. Could you also elaborate a bit on your decision not to seek governmental aid for your temporary layoffs in Eurocash? Does that have any link to your board's position to go ahead with the dividend payouts for this year?
Well, so far we've said that to date We have seen governmental support obviously from the overall sick leave part. When it comes to omställningsstöd and korttidspermittering, we have made the decision that we're not seeking for that we are taking an holistic approach so far in terms of how our segments and how our business developing. I think it's a really positive initiatives from the government, but we also think they are really aimed for companies that is really struggling, and then I think that so far we've seen that we can handle this. Obviously, we have to evaluate and look at it how long this will continue, but that's how we've taken it so far. We want to be transparent about that.
Okay, lastly, I'm interested if you see any indications, data points on sort of shopping pattern changes suggesting your customers are getting more wary about the general economy, say indications of some trading down or choosing cheaper private label options or anything like that?
We are slightly up on our private label, as you may seen in the report, which is obviously part of also we are continue to develop our private label sector. I think the only maybe indication you see on that part is obviously that the Willys is doing really well.
Okay. All right. Those were all my question. Thank you.
Thanks.
Thank you.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. At the moment, there are no further audio questions, so I will hand it right back to the speakers.
Thank you. We don't have any further comment more than thanks for listening. Stay safe and have a great summer. Thank you.