IKEA Group, the world’s biggest furniture retailer, said yesterday its annual profits grew as it expanded into China, increased sales from existing stores and saw strong online growth.
Net profit at the Swedish self-assembly budget furniture chain, which generates the bulk of its revenue in Europe, was up 5.5% to €3.5bn ($3.9bn) in the 12 months through to the end of August 2015.
Sales reached a record €31.9bn with comparable sales growth also strong at 5%.
“It was a very good year for bedrooms — for new products but also for old workhorses such as the Sultan and Malm (beds and storage). That drove growth last year, really, and landed us a very strong result” chief executive Peter Agnefjall told Reuters.
IKEA said it cut prices to customers, offsetting the cuts with lower purchase prices and better supply chain efficiency.
The firm, which owns most IKEA stores, said Germany showed record growth while the US, which is now neck-and-neck with Germany as IKEA’s biggest single market, continued to do well.
China was IKEA’s fastest-growing market with 19% sales growth including three new stores.
“We read a lot in papers that China has slowed but we can’t see that picture in our figures,” Agnefjall said.
IKEA said during the year it increased investments to €3.2bn from 2.2bn the year before, mainly in stores, shopping centres and renewable energy.
Agnefjall told Reuters investment would remain high.
“A lot is about transforming IKEA into a multi-channel retailer. We invest in new technology needed to be able to do that well, and also in a distribution network that differs slightly from the one for our stores,” he said Reuters.
He said total investments would however be slightly lower this year than last when IKEA bought shopping centre businesses from other entities in the group of companies that make up IKEA.
Agnefjall said the current year had started well.
“We feel that economies overall are holding up fairly well while varying a bit across single markets.”
IKEA expects to reach sales of €50bn around 2020.
Agnefjall said sales growth in the 13 online stores was 35%. He said he hoped to launch e-commerce in a few more markets this year after no new online stores opened in 2014/15.
IKEA opened 13 new stores in 2014/15, most of which were in its biggest market Europe, taking its total to 328 in 28 markets. It plans to open as many this fiscal year.
IKEA’s dividend to its owner, Netherlands-based Stichting INGKA Foundation was €666mn.
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