Festi's Record Year: How Diversification Fuels Iceland's Retail Giant

REYKJAVIK, ICELAND – February 05, 2026 – Icelandic retail and services conglomerate Festi hf. has unveiled a landmark 2025, posting financial results that significantly exceeded initial guidance and showcased robust growth across its diverse portfolio. The company's annual report reveals a powerful combination of increased sales, operational efficiency, and strategic investments that have strengthened its market position and set an ambitious course for the year ahead.

Full-year EBITDA for 2025 soared to ISK 16,001 million, a remarkable 27.9% increase from the previous year. This performance dramatically outpaced the company's initial projections, which were revised upwards twice during the year. The strong finish was powered by a fourth quarter that saw sales climb 7.2% to ISK 44,956 million and EBITDA jump by an impressive 43.9% year-over-year. The company's financial health is further underscored by an improved equity ratio, which now stands at a solid 41.2%.

"We are proud of the results achieved last year and first and foremost thankful to loyal customers and our exceptional employees all over the country," said Ásta S. Fjeldsted, CEO of Festi. "The company has thus strengthened its position in most areas and is in a very strong financial position at the end of the year. We are ready going forward to capitalise on the right opportunities – whether they are within or outside the group."

A Story of Diversified Success

Festi's exceptional performance is a testament to its diversified business model, which insulates it from sector-specific downturns and creates powerful group synergies. The holding company operates across several essential pillars of the Icelandic economy through its well-known subsidiaries: grocery chain Krónan, fuel and service station network N1, electronics retailer ELKO, and pharmacy chain Lyfja.

The 2025 results paint a clear picture of this strategy's success. The grocery and convenience goods segment, led by Krónan, was a standout performer, with sales increasing by 12.5% in the fourth quarter. Krónan itself saw a remarkable 14.4% surge in sales and a 25.6% increase in EBITDA, indicating strong consumer demand and growing market share. Similarly, electronics retailer ELKO experienced a 27.3% rise in EBITDA, while the pharmacy division, Lyfja, grew its EBITDA by 17.6%.

Even in segments facing external headwinds, the diversified model proved its resilience. The fuel and electricity division, N1, saw a modest 3.7% decrease in sales, a change attributed primarily to a global decline in fuel prices and a slight reduction in liters sold rather than a loss of competitive ground. The strong growth in Festi's other retail arms more than compensated for this, demonstrating the stability provided by the company's broad portfolio. Management credits this overall success to cost containment, leveraging group scale in supplier negotiations, and a significant effort to reduce inventory shrinkage, all contributing to improved margins.

Reshaping Retail with Digital and Service Innovations

A key driver of Festi's growth is a company-wide commitment to enhancing the customer experience through technological innovation and expanded services. Each subsidiary has rolled out initiatives that are not only improving convenience but also fostering customer loyalty and opening new revenue streams.

Krónan's Smart Store has seen its turnover increase by an astounding 50% year-over-year, a clear signal of consumer appetite for online grocery shopping. The service has been significantly expanded and now covers 96 postcodes across Iceland, bringing modern convenience to a wider swath of the population.

At N1, a focus on digital engagement has yielded a 17% increase in new cardholders and a 40% surge in the use of its mobile app. Features like in-app mileage registration have proven popular, while the ability to pay for fuel and charging directly through the app is creating a more seamless customer journey. In a significant strategic move, N1 also acquired a 70% stake in the healthy fast-food chain Local salad, diversifying its offering and tapping into the growing demand for fresh, convenient food options.

Lyfja is undergoing a transformation of its own, upgrading pharmacies and investing in technology like a new pharmaceutical robot to increase efficiency and improve its home delivery service. The Lyfja app is growing rapidly, recording its largest sales quarter ever. The company is also expanding its product range through the acquisition of the Jurtaapótekið brand, catering to the growing market for natural health products.

Meanwhile, electronics retailer ELKO has successfully ventured into financial services with its own consumer loan system, ELKO's Smart Payments. The system, which allows customers to spread payments over 36 months, was met with overwhelming demand, disbursing over 1,500 loans in its first two months and fueling the largest Black Friday sales event in the company's history.

Expanding Footprints, Building Communities

Beyond digital innovation, Festi is investing heavily in its physical presence with an ambitious expansion plan that will bring its services to more communities across Iceland. This growth is not just about building stores; it's about strategic placement and regional development.

Krónan has already announced a new store in Höfn in Hornafjörður and is preparing for a new shopping center in Hvolsvöllur. Looking further ahead, the company has secured a plot for a future store in Urriðaholt, slated to open in 2028, demonstrating a long-term commitment to growing with Icelandic communities.

N1's expansion is tied to major infrastructure projects, with a new service center at Selfoss planned to coincide with the opening of a new bridge over the Ölfusá river in 2027. New facilities are also under construction in Akranes and Hafnarfjörður, with the latter set to become the largest tire hotel in the country, complete with a comprehensive service station for commercial vehicles.

ELKO will open a new flagship store in the prime Smáralind shopping center, while Lyfja will open a new pharmacy in Hafnarfjörður strategically located next to a Krónan—a clear example of leveraging group synergies to create convenient, one-stop retail destinations for customers.

Navigating the Future with a Strong Outlook

Looking ahead to 2026, Festi's leadership remains optimistic, projecting continued growth despite acknowledgements of potential economic uncertainty and forecasts of rising inflation in the first half of the year. The company has issued an EBITDA guidance of ISK 16,500 – 17,000 million for 2026, signaling confidence that its strategic initiatives will continue to bear fruit.

This confidence is backed by a strong financial foundation, further solidified by the company's first-ever commercial bill issuance in late 2025, which was met with a very positive reception from the market. This financial flexibility, combined with a clear strategy for growth, positions Festi to continue its trajectory. The company will place great emphasis on increasing optimization and efficiency throughout its value chain, with the stated goal of passing those benefits on to its customers. With numerous integration and development projects already underway, Festi appears well-equipped to build on its record-breaking year and further cement its role as a leader in Icelandic retail.