Ikea points to a recovery in consumer demand as sales rises

Ikea, the world's biggest furniture retailer, reported a 3.1 per cent rise in income for the 12 months ended August 31st, on the back of recovering household consumption.

Net income for the 12 months ended Aug. 31 increased 3.1 per cent to €3.3 billion euros ($4.5 billion), the vendor of Billy bookshelves said in a statement today.

"Household consumption has strengthened in several markets," chief executive officer Peter Agnefjaell said. "It's too early to say the difficult economic situation is over but there are positive signs."

Important markets such as the US are recovering, and Ikea sees signs of a general recovery in Europe and an improvement in several southern European countries, said Agnefjaell, who became CEO in September last year after starting his career at an Ikea store in 1995.

“Consumers have more confidence, they have started to buy more and open their wallets more,” Agnefjaell said at a press conference at the Kungens Kurva store outside Stockholm.

Still, other companies see difficult conditions in Europe. Carpetright fell as much as 4.1 per cent in London trading today after predicting underlying pretax profit for the year would miss analyst estimates because of a deterioration in the Netherlands.

Ikea is seeking to double sales by 2020 by improving existing stores, opening new ones and expanding its e-commerce offer. The retailer had 1.3 billion visits to its website during the year, up from 1.1 billion.

“We still see room for growth even in the most mature Ikea markets,” Agnefjaell said while presenting the results in a grey Ikea kitchen. One highlight of the year was when Ikea received final approval from the Indian government to open stores there, said Agnefjaell.

For the fiscal year 2014, Ikea Group plans to invest €2.5 billion in stores, factories, renewable energy and shopping centers, up from €1.9 billion a year earlier. The retailer also said it has allocated €1.5 billion for investments in renewable energy until 2015, and plans to spend the money on solar panels at its stores or wind turbines around the world.

Bloomberg