IKEA sales growth falls flat at 1%

Ikea, the Swedish flatpack furniture retailer and destination of choice for first-time buyers getting on to the housing ladder, notched up a paltry 1% increase in sales in the UK and Ireland for the year to August. This compares to an increase of 7.7% for total sales globally for the same period.

The figure underlines the fragility of consumer confidence in the UK and Ireland, as well as the slump in housing transactions, particularly among first-time buyers. The traditionally secretive company admitted it had been another "challenging" year for the UK and Ireland but that it remained successful by catering for "cost-conscious" shoppers. It pointed to new figures from market intelligence firm Verdict Consulting which said Ikea was the number one home furnishing retailer in the region. At the end of 2009, it had increased its market share to 6% while overall the market had declined, according to the data.

The figures published today show that sales of kitchens in the UK and Ireland rose the most, and were up by 11% compared with last year. As a result, Ikea increased its market share by 1.4%. Next best was "storage across the home", which includes items such as shelves and clothing racks, where sales were also up by 11%. These were followed by "dining solutions", such as dining chairs and tables, which were up by 9%, and "children's IKEA", including children's bedroom furniture, which was up by 4%. In total, sales rose to £1.2bn for the year, representing 6% of the group's total sales of €23.1bn.

In an interview this weekend, Hansson said that householders would still want to spruce up their home, even if they are less likely to move house. "It might be that people will want to move house less, but I believe they will want to create a haven."

The privately owned company was founded in 1943 by Ingvar Kamprad, one of the world's richest people, and has 280 stores in 26 countries. Last year four fifths of its sales came from Europe. The company is making an effort to be more transparent. Last month, rather than just publishing sales figures, for the first time it revealed its annual profits for the group, making €2.5bn (£2.17bn) last year, but did not break this down by country.

According to its accounts filed at Companies House, price cuts and the cost of opening seven stores in six years meant profits in the UK fell in the year to August 2009 to £17m. It is thought that there will be significant improvement when it posts its profits for the last year in the next few weeks. No new stores have been opened in the last year.

Hansson took the helm of Ikea in the UK and Ireland two years ago. One of the changes he made was to reduce the size of display rooms in stores to reflect the fact that British homes are the smallest in Europe.

Source : Tim Webb - Guardian.co.uk