Ikea Ireland musters 9% profit growth despite higher costs – The Irish Times

Online sales now account for more than half of Ikea’s Irish business, having more than doubled in the year to last August, according to accounts filed for the Swedish homewares giant’s Irish operations.

Ikea Ireland, the trading company behind the furniture giant’s Ballymun outlet and a small order-and-collect store in Carrickmines, reported after-tax profits of more than £3.2million euros over the year to the end of last August, up around 9% on its previous financial year despite being forced to close its doors between January and May 2021.

Ikea Ireland’s turnover increased by around 8% to almost 191 million euros against 176.6 million euros the previous year. Online sales accounted for more than half of that figure, the company’s administrators noted in the accounts, down from around 24% the previous year, as its customers were stuck at home for long periods throughout the year. year.

This level of adoption had “accelerated the implementation of many [its] transformation plans,” for example, the introduction of click and collect services and online order fulfillment, the administrators said.

Although travel has been restricted due to the pandemic, the company has seen “a huge appetite among [its] customers to modernize their living space”, which stimulated the annual increase in sales.

The company paid a dividend of 3 million euros during the year, while its personnel costs increased slightly from 17.6 million euros in 2020 to 17.8 million euros. At the end of August 2021, Ikea Ireland employed 699 people, compared to 695 the previous year.

However, the company’s costs jumped about 11.5% due to the supply chain disruption caused by the pandemic. Ikea Ireland’s cost of sales topped €143m, up from €128.5m in 2020.

Last September, a month after the accounts period ended, Ikea Ireland issued a statement warning Irish customers that up to 10% of its product ranges were unavailable.

“Like many retailers, we are experiencing ongoing challenges with our supply chains due to Covid-19 and labor shortages, with transportation, raw materials and supply all impacted,” a- he declared.

“Additionally, we are seeing an increase in customer demand as more people spend more time at home,” the company said. “As a result, we are experiencing low availability in some of our ranges, with around 10% downtime.”

In anticipation of Britain’s withdrawal from the European Union, the company moved its Irish distribution chain from the UK to Belgium to maintain continuity of supply. Administrators noted in the 2021 accounts, however, that “central fulfillment of customer orders”, primarily online orders, “is still done from the UK”.

Looking ahead, directors noted that the risk of supply chain disruption following the “recent outbreak of war between Russia and Ukraine” was one of the main risks for the company.

In March, Ikea’s parent company Ingka, also one of the world’s largest mall operators, closed 17 Ikea stores in Russia in response to the invasion.

However, Ingka still operates 14 malls in Russia and said in a statement last month that it hopes to one day bring Ikea back to the country but “the preconditions are not in place”.

In the Irish accounts, Ikea Ireland directors said “management remains close to the situation” and “is working closely with external partners” to “make changes where necessary” and manage disruption .