Ikea Group net profit rises boosted by online and China

Ikea Group, the world’s biggest furniture retailer, said yesterday its annual profits grew as it expanded into China, increased sales from existing stores and saw strong online growth.

Net profit at the Swedish self-assembly budget furniture chain, which generates the bulk of its revenue in Europe, was up 5.5% to €3.5bn in the 12 months through to the end of August 2015.

Sales reached a record €31.9bn with comparable sales growth also strong at 5%.

“It was a very good year for bedrooms, for new products but also for old workhorses such as the Sultan and Malm, beds and storage.

"That drove growth last year, really, and landed us a very strong result,” chief executive Peter Agnefjall said.

Ikea said it cut prices to customers, offsetting the cuts with lower purchase prices and better supply chain efficiency.

The firm, which owns most Ikea stores, said Germany showed record growth while the US, which is now neck-and-neck with Germany as Ikea’s biggest single market, continued to do well.

China was however Ikea’s fastest-growing market with 19% sales growth including three new stores.

“We read a lot in papers that China has slowed but we can’t see that picture in our figures,” Mr Agnefjall said.

Ikea said during the year it increased investment to €3.2bn from €2.2bn.