Expansion costs drag Ikea Ireland profits down 71%

Expansion costs drag Ikea Ireland profits down 71%

Pre-tax profits at the Irish operation of Swedish furniture giant Ikea plummeted by more than 71%, to €2.53m, last year as rising investment costs ate into performance.

Irish customers spent nearly €3.6m a week - or €181.1 million across the year - at Ikea’s main Ballymun store and at its 'click and collect' outlet at Carrickmines, in south Dublin.

Ikea's dedicated Irish online shopping channel, which opened in November 2017, generated €17.3m in sales, or 9.5% of the Irish division's total sales over the course of the 12 months to the end of last August.

However, a near 16% rise in the cost of sales to €126.37m was the main contributory factor to the sharp drop in profits.

"The new e-commerce sales channel has been more successful than expected and continues to grow. This change in sales method has required additional investment by the company but the directors are confident this impact will improve as the business adjusts its costs," Ikea said.

Ikea Ireland's employee numbers increased from 674 to 720 last year, boosting staff costs by 9% to €21.5m.

The company said it remains confident in the continued growth in online sales in Ireland and said it is "well-positioned" for growth here.

Last year Ikea said it had no plans to open further shops in Ireland - despite speculation to the contrary - after seeing online orders begin to drive its Irish sales.

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