Ikea assembles record profits for 2011

Swedish furniture giant Ikea on Friday reported a ballooning net profit in 2011 amid booming sales and increased market share in most markets and said it planned hefty investments in the year to come.

Ikea assembles record profits for 2011

The world’s largest furniture retailer, which is an unlisted, family-owned company that only recently began releasing more regular earnings reports, said in its annual statement that its net profit rose 10.3 percent to €2.97 billion ($3.85 billion) during its 2011 fiscal year — September 2010 to August 2011.

Global sales meanwhile jumped 6.9 percent to €24.7 billion, Ikea said, adding that “sales grew in almost all countries with our biggest gains being in Russia, China and Poland.”

“We have gained market share in more or less all markets,” company president and chief executive Mikael Ohlsson said in a statement.

“Despite price increases for many raw materials, we have lowered prices to our customers with 2.6 percent, while the quality of our products has improved,” he said, explaining the strong results.

Ikea’s chief financial officer Sören Hansen meanwhile pointed out that the fiscal year had “been a challenging period for many of us,” but since “being cost conscious is part of the Ikea DNA … we’re fortunate to have the resources to safely navigate uncertain economic climates.”

In fact, the company was doing so well, he said that it planned to invest around three billion euros in 2012 “in stores, factories and retail centres, as well as in the expansion of our wind farms and solar power sources.”

The company meanwhile said higher purchase prices and growing investments had sent its gross margin down to 44.2 percent during the 2011 fiscal year from 46.1 percent a year earlier.

During the financial year, Ikea said it opened seven new stores in seven countries and at the end of August counted a global total of 287 stores in 26 countries.

The company added 4,000 new employees to its payroll during the fiscal year 2011 bringing the total to 131,000.

Europe accounted for 79 percent of sales, while North America stood for 14 percent and Russia and Asia and Australia making up the remaining seven percent.

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Ikea will buy back your used furniture at up to half the price

In the run-up to what would in normal times be the festive season sales rush, Ikea has vowed to buy back used furniture from customers to resell – and pay up to 50 percent of the original price.

Ikea will buy back your used furniture at up to half the price
Got any pieces of Ikea furniture at home? You may be able to get rid of it and get money back. Photo: Fredrik Sandberg/TT

Ikea, the world's largest furniture chain, said Tuesday it would begin buying back used furniture from customers to resell – and pay up to 50 percent of the original price.

The “Buy Back Friday” scheme, timed to coincide with the “Black Friday” pre-Christmas retail frenzy, will run from November 24th and until December 3rd in 27 countries.

“Rather than buy things you don't need this Black Friday, we want to help customers give their furniture a second life instead of making an impulse buy,” said Stefan Vanoverbeke, deputy retail operations manager at Ingka Group, Ikea's parent company.

To address concerns its affordable, flat-pack products encourage overconsumption and waste, the Swedish company had previously said it would start renting and recycling furniture as part of an eco-drive.

Under its buyback scheme, the group said that “anything that can't be resold will be recycled or donated to community projects to help those most affected by the Covid-19 pandemic”.

“Some countries like Australia and Canada for example are currently testing different buyback services, but BuyBack Friday will be the first time that 27 countries do this together,” the statement added.

The Swedish giant employs over 217,000 people and has more than 50 outlets. Its annual turnover is around 40 billion euros ($46 billion).

The group did not specify how it would determine the price paid for second-hand furniture and customers will receive a voucher, not cash, for their products.  

As part of efforts to reduce waste, Ikea has already begun repairing and re-packaging products in every store that have been damaged in transit, as well as allowing customers to return products – including furniture – for resale or donation to charities.