Ikea pretax profits double as shoppers spend €2m a week

Shoppers at Ikea’s Irish store in Dublin last year spent almost €2 million per week on home furnishings leading to the store almost doubling pretax profits to €5.8 million.

New accounts just filed by Ikea Ireland Ltd show that the firm increased its pretax profits by 96 per cent from €2.97 million to €5.8 million in the 12 months to the end of August 31st last.

Best-sellers
Consumer spending on best- selling Ikea items such as Billy bookcases, Expedit storage units and Lack tables resulted in revenues at Ikea's Ballymun store last year increasing marginally from €102.6 million to €103.98 million.

The 2013 performance represents a turnaround in terms of the store’s profitability after the business saw a steady decline in pretax profits from €11.4 million in its first full year of operation in 2010 to €2.97 million in 2012.

The Dublin outlet – which is equivalent in space to 5½ soccer pitches – contains 9,000 home furnishings, a 550-seater restaurant, a food hall and creche along with 1,850 car-parking spaces.

According to the directors’ report “the directors are satisfied with the results of the company for the year. The directors anticipate that the level of activity and profitability in future years will continue to be in line with expectations”.

The increase in pretax profits arose from lower cost of sales and lower interest charges along with the increase in revenues.

Cost of sales
The figures show that the firm's cost of sales reduced from €71.7 million to €70.5 million with bank interest payments down from €2 million to €1.78 million. The store's operating profits increased by 19 per cent from €5 million to €7.6 million. Interest payments totalling €1.78 million reduced the firm's profits to €5.8 million. The firm paid corporation tax of €957,172 to give a post tax profit of €4.87 million.

The profit takes account of non-cash depreciation costs last year of €3.84 million – the accounts give a book value of €76.8 million of Ikea’s land and buildings at Ballymun.

On the firm’s principal risk and uncertainties, the directors say the principal risk “is the downturn in the Irish economy”. They remain confident that Ikea “will continue to gain market share”.