Ikea says job cuts are 'last resort' at its struggling Belfast outlet
Published 11/11/2011 | 05:00
SWEDISH furnishings giant Ikea has said more redundancies at its outlet in Belfast will be a "last resort" even as it struggles with a sharp decline in trading at the store.
Ikea, which made 21 staff redundant at the outlet early last year, has cautioned the current trading pattern at the Belfast operation is "well below" what it would expect from a market of its size and that it's engaged in the "most challenging period since the downturn in the economy".
The store, which opened in late 2007, has been hit by the double whammy of a constricted economy and the opening of Ikea's Dublin outlet in 2009. The Dublin operation -- one of the group's most successful -- has siphoned off customers from the Republic who used to make pilgrimages to Belfast to stock up on IKEA goods.
IKEA made the warnings in correspondence to the Stormont Executive in Northern Ireland in response to its plans to raise retail levies for bigger stores. The proposal is aimed at easing the burden on smaller retailers.
But IKEA has said the plan will result in the annual rate bill for its Belfast outlet rising to £320,000 (€374,000).
Changes to the retail levy are due to come into effect next April.
It said the hike would "place a huge burden on IKEA Belfast's already strained balance sheet". It added that any increased costs would have to be borne locally, as each of its outlets operate as independent entities.
"A last resort" would be to initiate fresh redundancies.
Iain Joannides, the finance and operations manager at IKEA Belfast attempted to downplay the warnings yesterday.
"IKEA Belfast has invested substantially in its Belfast store and plans for the long term and does not expect or demand short-term profits," he said.
IKEA's Belfast store currently employs close to 300 people directly. It employed 400 when it originally opened.
In its first full year of trading, 2010, IKEA's Dublin store reported sales of €110.7m and made a pre-tax profit of €11.4m. It employs close to 500 people.