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Ikea set for spending spree as profits boom

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Ikea set for spending spree as profits boom
11:07 CET+01:00
Swedish furniture giant Ikea reported on Wednesday an 8-percent rise in full-year profit and said it was benefiting from more cost-conscious consumers.

Net profit rose 8 percent to 3.2 billion euros ($4.3 billion) as revenue rose 9.8 percent to 27.6 billion euros in the year ending August 31st.

"Customers are getting more and more value conscious, which makes Ikea a better choice," Mikael Ohlsson, chief executive of the Ikea Group, said in a statement.

"The economic conditions throughout the world are challenging and have affected people's lives and consumption," he added.

Operating profit was down three percent as raw material prices rose and the company tried to keep more products in stock by raising inventories.

"To make sure that our customers always find the products they need when shopping at Ikea, inventory levels were kept deliberately high, a step that in turn supported sales," Ohlsson said.

The company, the world's biggest furniture retailer, which is an unlisted, family-owned company that only recently began releasing more regular earnings reports, said around 4.6 percent of its growth came from existing stores after adjusting for currency changes.

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"Some of the biggest growth was in China, Russia and Poland, but the US and Germany also had significant growth," Ohlsson said.

Europe accounted for 70 percent of sales, while North America stood for 16 percent and Russia and Asia and Australia made up the remaining 14 percent.

The Ikea Group opened 11 new stores in nine countries in the period. At the end of the year, it had a total of 298 stores in 26 countries.

Speaking with Swedish business daily Dagens Industri (DI), Ohlsson said Ikea plans to open 25 new stores this year and will likely need to hire 75,000 new employees in the coming years.

"We're never satisfied," he told DI.

Traffic to its website rose by 21.8 percent to more than a billion visits.

Ikea, which sparked controversy last year when women were removed from the pages of its Saudi Arabian catalogue, also said it had launched "a common diversity and inclusion approach."

"Today, almost half of our 17,000 managers are women, and our co-workers come from all cultural and educational backgrounds," the company said.

AFP/The Local/og

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