Swedish retailer Ikea racked up record sales of more than £1bn over the past year as customers snapped up its flat-pack furniture, it emerged today.
The group – famous for its huge showrooms and home assembly kits – confirmed its popularity with Britons by breaking through the landmark barrier and increasing like-for-like sales by 11%.
It managed to escape the gloom elsewhere in the UK furniture market, which has led troubled rivals MFI and Courts to issue profits warnings in recent weeks.
UK boss Peter Hogsted confirmed in an interview with Retail Week that sales had soared 15% to rise above the £1bn mark in the year to August 31.
He put the figures down to empowered staff, better customer service and longer operating hours. Earlier this year, Ikea started delegating key strategy decisions to store managers.
Hogsted said Ikea was taking market share, adding: “I think the competition is shifting, the DIY businesses are growing stronger.”
He also said there had been no customer backlash to a decision to introduce a 70p levy on credit card transactions.
Privately-owned Ikea broke into the UK market in 1987 with its first store in north London.
It now employs about 6,000 staff across 12 outlets at locations including Birmingham, Edinburgh, Manchester and Newcastle.
It keeps prices low by packing and shipping its items in flatpacks, contributing to profit margins that are higher than its rivals.
Latest figures from market research group Verdict show its margins were 16.1% in the year to August 2003, compared with 11.2% for DFS and 4.6% for MFI.
The upbeat news comes just weeks after MFI warned second half profits would be “materially below” the first six months after significant problems with a new supply chain system.
Courts also said a restructuring of its UK arm would lead to substantial operating losses in its first half.
When Ikea was set up in Sweden in 1943, it offered items such as pens, picture frames, wallets, nylon stockings and anything else that could be sold at a reduced price.
The name was formed from the initials of its founder, Ingvar Kamprad, and Elmtaryd and Agunnaryd, the farm and village where he grew up.
It started selling furniture in 1947, opened its first showroom in
1953 and now has 186 stores across 31 countries.
References: EGi News 01/10/04
