IKEA HAS dismissed the threat posed to its fortunes by the worst recession in the history of the State as insignificant and claimed that while the downturn has “adversely affected” its business in the Republic, it will continue to aggressively grow its market share here.
In its first full year accounts filed with the Companies Office, the notoriously secretive, family-owned retailer described its first year of doing business in the Republic as “difficult”. It said that despite the tough trading conditions it had made a pretax profit of €11.4 million in the 12 months to the end of last August.
This would make the Irish Ikea amongst the most profitable in Europe. Its British stores recorded an after-tax profit of just over €30 million on sales of more than €1 billion last year although gross profits of both are broadly comparable.
Ikea Ireland said it had recorded average sales of more than €2 million a week in its first full year of trading at its Ballymun store, which employs 452 people, and said that sales for the 12-month period amounted to €110.7 million.
“Ikea was affected, like many other retailers in Ireland, by the slowdown in the economy,” the directors’ report says. “The financial services crisis, and its spillover into the real economy has adversely affected the Irish retail environment and trading of the company,” it continues.
It concludes, however, that the “threats are not considered to be significant, and it is the opinion of the directors that Ikea will continue to gain market share during this slow down”.
It is an entirely different story in Greece, one of the other countries bailed out.
Yesterday Fourlis, the Greek franchisee for Ikea, said its first-quarter profits had plummeted by 93 per cent as Greeks simply stopped spending. Sales dropped 41 per cent to €95.8 million with revenues from Ikea stores in Greece and Cyprus, which account for about 80 per cent of operating profits, down 7.4 per cent at €67 million.
Ikea is owned by a foundation controlled by Swedish founder Ingvar Kamprad who promised late last month that the company would be more transparent in its dealings globally.
Mr Kamprad insisted that Ikea had “nothing to hide”. He was speaking after a documentary aired on Swedish public television alleged that the foundation that controls the company had been set up to avoid taxes.
“There is no pretension to hide anything. We are going to go through everything and show that we follow each country’s laws and regulations. We will make ourselves more transparent,” he said.
Worldwide, Ikea employs 127,000 people and recorded sales of €23.8 billion last year – an increase on the €22.7 billion revenues in 2009.
