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article imageIkea says annual profit growth slows

By AFP     Jan 28, 2014 in Business

Swedish furniture giant Ikea reported on Tuesday sharply slower profit growth for the 2012-2013 fiscal year compared to performance in previous years but did not reveal the cause of the slowdown.

Net profits increased by 3.1 percent to 3.3 billion euros ($4.50 billion), Ikea group said in a statement.

In the 2010-2011 fiscal years, net profit rose by 10.3 percent and in 2011-2012 by 8.0 percent.

Revenue growth also slowed, with 3.2 percent growth at 28.5 billion euros.

In 2010-2011 and 2011-2012 revenue grew by 6.9 and 9.8 percent respectively.

Ikea Group did not explain the causes of the slowdown but said it had "gained market share in almost all markets" and posted "strong growth in China, Russia and the US."

"Consumer spending is improving in many countries," chief executive Peter Agnefjaell said in the statement.

"While the challenging economic situation may not be over, there are positive signs."

In the beginning of January, Ikea admitted being behind in its target of doubling sales by 2020, which had "so far proved to be too aggressive", according to Goeran Grosskopf, chairman of the Ingka Holding parent company that comprises all of the Ikea businesses.

Grosskopt blamed the slowdown on the global economic context.

Ikea confirmed on Tuesday that it was keeping its 50-billion euro sales goal for 2020.

"We have a long-term focus," Agnefjaell said.

"We'll keep developing better products at lower prices, improving the shopping experience and becoming more accessible to our customers, for example through an improved service offer, e-commerce and continued expansion."

In an interview with the Wall Street Journal, Agnefjaell said he relied more on stores than online sales to meet the company's goal.

"I think that in 2020 the absolute majority of sales will still be in our stores," he said.

"We see that Internet and e-commerce is growing, but at the same time, when buying a new bed a lot of people want to try it first, and if you buy a sofa you may want to touch the fabric."

Ikea currently owns 305 stores in 26 countries and employs 135,000 people worldwide.

Founded in 1943, the company is still family-owned, and its founder, Ingvar Kamprad, is one of Europe's richest men.

Kamprad, aged 87 and suffering from health problems, is still listened to at Ikea, even though he has left most of his various functions within the company.

Despite his reluctancy to speak to the media, last year he criticised the company's project to open 25 stores per year as being too ambitious.

Ikea's chief executive was at the time Mikael Ohlsson, Agnefjaell's predecessor.

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