Ikea's Dublin profits fall 40pc to €6.8m as downturn takes its toll
Sales of everything from shelves to spatulas weren't enough to prevent profits at Ikea's Dublin outlet sinking 40pc to €6.8m during its last financial year as it succumbed to the effects of the economic slide and banking crisis.
The Swedish retailer opened its Dublin store in 2009 and made a massive €11.4m pre-tax profit in the first full financial year as shoppers flocked to the outlet to snap up everything from home furnishings to kettles and meatballs. It made the store a phenomenal success and one of the most profitable in the group's extensive worldwide portfolio.
But now, directors of the Irish operation in Ballymun have conceded that the Dublin premises is feeling the chill wind of the slowdown as turnover fell just over 7pc to €102.8m in the last financial year.
"The decrease in turnover is due to Ikea being affected, like many other retailers in Ireland, by the slowdown in the economy," it said in the set of accounts just lodged with the Companies Office.
"The financial services crisis, and its spillover into the real economy, has adversely affected the Irish retail environment and trading of the company," it added.
"However, these threats are not considered to be significant, and it is the opinion of directors that Ikea will continue to gain market share during the slowdown."
Paul Reid, the store manager at Ikea Dublin, told the Irish Independent that the outlet continued to perform well.
"The Dublin store achieved a strong performance, given the difficult economic environment, and reflects the value for money and extensive product range that Ikea offers the consumer," he said. "We are hugely heartened by the way Irish consumers have enthusiastically embraced the Ikea concept."
He said the biggest selling items at the Dublin store include Expedit shelves, Extorp sofas, Hemnes day beds, Malm chests and Pax wardrobes.
But the directors also warn that the decline in the value of the euro is expected to affect the Dublin operation's profitability in the current financial year.
Despite the fall in sales and profitability, Ikea's Irish figures are certain to be viewed enviously by competitors who've struggled to survive in the current climate. Grafton Group recently put a number of its Atlantic Homecare outlets in receivership, blaming high rents and the tough climate.
"We continue to invest in our prices in the long term and to improve the shopping experience for our customers," the Ikea directors note.
The Ikea outlet in Dublin, which employs about 450 people, proved so successful following its initial launch that the chain soon lobbed in a planning application to boost the size of the store by 10pc.