IKEA reports 0.4% rise in net profit for FY 2014

IKEA, the world’s biggest furniture maker, on Wednesday said increased growth in all its sales channels helped drive a slight rise in net profit for fiscal 2014 as demand remained high in North America and continued to recover in Europe.

The maker of low-price build-it-yourself flat-pack furniture has chalked up record revenue and grown profit as customers in many key markets, including Europe, have turned to cheaper product alternatives amid the economic slowdown.

Net profit rose 0.4% to €3.33 billion ($3.79 billion) in fiscal 2014—, which ended Aug. 31—and was boosted by record revenue of €29.29 billion, up from €28.5 billion in the year-earlier period, and higher financial income. However, increased costs related to employee programs and larger price reductions compared with fiscal 2013 weighed on operating income and the gross margin, which declined by 5.8% to €3.79 billion and by 0.4% to 42.9%, respectively.

“North America performed well and while the challenging economic situation may not be over, Europe continued to show improvements,” IKEA said. “An especially positive sign was the growth in most of southern Europe where Portugal did particularly well and the situation in Spain is improving quite quickly.”

The company—which generates most of its sales from Europe—said it grew in almost all of its markets, and that its fastest-growing regions were China, Russia and Hungary.

“Fiscal year 2014 was a good year for IKEA. I am happy to see increased growth in all our sales channels; in existing stores, in the opening of new stores and in e-commerce,” Chief Executive Peter Agnefjäll said.

In the September through August period, IKEA opened 12 new stores in 10 countries, including its first store in Croatia and its first city-center store in Hamburg Altona, Germany, where it offers free cargo bikes for home deliveries. In December, it also opened its first store in South Korea.

The furniture maker invested €1.7 billion in stores, factories, renewable energy and shopping centers and now has 315 stores in 27 countries. Visits to IKEA.com rose 15% in fiscal 2014 to more than 1.5 billion while physical store visits increased 4.7% over fiscal 2013 to 716 million, IKEA said.

It reiterated ambitions to increase revenue to €50 billion by 2020 and said it was moving ahead with plans to open more stores in emerging markets, including 25 in India.

Source : Anna Molin - Wall Street Journal
www.wsj.com/articles/ikea-posts-slight-profit-rise-1422428880