Business World

Thursday 19 September 2019

Ikea profits fall by 26pc as it invests in future

 

Ikea's large out-of-town stores have become less popular. Photo: PA
Ikea's large out-of-town stores have become less popular. Photo: PA

Ikea Group has said large investments in improving its online offering, delivery services and in opening new smaller city-centre stores to meet changing shopping habits pulled its full-year profits down 26pc.

The world's biggest furniture retailer is known for its vast self-service out-of-town stores, but is transforming its business model in the face of mounting competition, increasing urbanisation, and more demanding consumers who would rather order online. Ikea is also developing faster and cheaper delivery services and assembly services as DIY popularity drops.

Ikea Group, which owns most Ikea stores worldwide, said it invested €2.8bn in total in stores, distribution networks, shopping centres, renewable energy and forestry in the fiscal year to the end of August. The investment led to a drop in operating profit to €2.25bn, despite nearly 5pc growth in retail sales. It saw a nearly 50pc jump in online sales.

Reuters

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