Ikea profits rise as online sales double during Covid

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REVENUE for the Irish branch of furniture giant Ikea soared to 190.89 million euros last year – or 3.67 million euros a week – as the company sold more goods in online than in store for the first time.

n a pivotal year for Dublin-based Ikea Ireland Ltd, pre-tax profit increased slightly from €3.69m to €3.76m over 12 months at the end of last August.

The directors say “the business has become more profitable, despite the challenges of 2021, with its sustained store closures and continued economic uncertainty”.

The brick-and-mortar Ballymun company’s flagship store was closed from late December 2020 until May 17 last year as part of a government-mandated Covid-19 retail shutdown, and the day of the reopening, the store was “the best performing” of the group’s 378 stores in 30 countries.

The company recorded an increase in profits thanks to online sales which more than doubled from 42.39 million euros to 99.26 million euros.

In the company’s second year affected by the Covid-19 pandemic, directors say online sales accounted for 52% of sales, down from 24% in fiscal 2020 and 16% in the 2019 financial year.

Revenue increased by 8% or 14.22 million euros from 176.66 million euros and the administrators say that “we have seen a huge appetite among our customers to modernize their homes and make their homes more and more multifunctional” with travel still restricted due to Covid-19 and many of the Irish population continuing to work from home.

Administrators say the increase in online sales has accelerated the implementation of many of its transformation plans such as click and collect and online order fulfillment from the store to create additional capacity to meet on demand online.

The Irish unit paid out 3 million euros in dividends.

The business recorded an operating profit of €4.479 million and after taking into account net interest payments of €717,186, the business recorded a pre-tax profit of €3.76 million.

Ikea Ireland has expanded since the end of the year with the opening of two Home Service Points (HSPs) in Naas in November 2021 and St Stephen’s Green Shopping Center in Dublin in February this year.

The “low cost” stores are 70 m² to 100 m² each, have a target turnover of 1.5 million euros per year and the expenses for each store “are below budget”.

The managers specify that “the first customer feedback has been very positive”.

Last year, the number of employees at Ikea Ireland fell from 695 to 699, with personnel costs increasing slightly from 17.66 to 17.87 million euros.

Directors’ compensation last year rose from €227,709 to €277,763.

Last year’s earnings include non-cash depreciation charges of €2.39 million and operating lease charges of €898,661.

Shareholders’ equity amounts to €29.5 million.

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