IKEA Group, the world’s biggest furniture retailer, posted a record net profit on Wednesday for the 2011/12 year, helped by sales and market share growth as budget design enticed austerity-hit shoppers.
Net profit at the privately-held Swedish firm, known the world over for low-price, self-assembly, flat-packed furniture, rose 8% to €3.2 billion ($4.3 billion) in the 12 months through last August.
IKEA says it is relatively resilient to economic downturns as these make cost conscious consumers turn to cheaper goods.
“Customers are getting more and more value conscious, which makes IKEA a better choice,” IKEA said in an annual summary.
Operating profit, however, shrank by 3% to 3.5 billion crowns as the group stuck to a strategy in recent years to cut prices to customers, while costs for raw materials and higher inventories increased. IKEA has only in recent years started opening up the books on its results.
Chief executive Mikael Ohlsson said in an interview that IKEA had decided to keep larger stocks than usual in the year to improve product availability in stores.
Revenue grew by 9.5% to a record €27 billion, with stores open a year or more accounting for a 4.6% increase in local currencies, as the group gained share in all markets.
Eye on India
India is expected to approve IKEA setting up stores after a key investment board on Monday gave a go-ahead.
After India last year approved 100% foreign direct investment in single-brand retail, IKEA posted plans to invest 1.5 billion crowns to open 25 stores there.
“I hope that long-term we will be strong in Europe, North America, Russia, China and India,” Ohlsson said.