Ikea’s UK profits dropped 10% last year as the flat-pack furniture specialist cut prices and invested in home deliveries.
The Swedish chain increased sales by 12% to £1.46bn in the year to the end of August 2014 at Ikea Limited, which operates 18 stores in the UK, according to accounts filed at Companies House. But pre-tax profits dipped to £41.8m from £46.7m a year before.
That compares to a slight rise in profits for the parent company to €12.7bn from €11.9bn a year before, as revealed last year.
It’s not clear how much Ikea invested in price cuts in 2014, but country retail manager for the UK Gillian Drakeford has pledged to spend £27m on lowering prices this year, its biggest ever commitment.
“The downturn in the economy has adversely affected the UK retail environment and trading of the UK stores,” Ikea wrote in the accounts. It warned that the impact of ongoing weakness would be “significant” but Ikea hoped to gain market share during the downturn.
Drakeford is aiming to double the group’s UK turnover and market share by 2020. Already the UK’s biggest furniture retailer, the company increased its market share by 0.5 percentage points to 7.1% last year.
Ikea received planning permission for a new store in Sheffield earlier this year and has also acquired sites in Reading, Greenwich and Exeter. The retailer only launched online in 2007 and sales via its website now account for 10% of its trade.
The company is also committed to becoming self-sufficient in energy by 2020, by investing in renewables and efficiency measures. The Ikea group has invested €1.5bn in such measures so far.
