Ikea Expects Sales to Grow 15.5%, Russia to Help Pace Europe

30 Mar 2007 • by Natalie Aster

Ikea, the world's largest retailer of home furniture, expects to increase sales by about 15.5 percent annually in coming years and said Russia will help pace revenue growth in Europe, reported The Bloomberg.

Ikea, founded in Sweden and registered in the Dutch city of Leiden, had sales of 17.3 billion euros ($23 billion) last year. The retailer, which owns stores in 24 countries, started its first outlet in Russia in 2000 and now has eight in the country.

``Russia is important and we have a pretty aggressive establishment plan,'' Chief Executive Officer Anders Dahlvig said in an interview at the Barcelona retail conference yesterday. ``Russia is definitely a future growth market.''

Russia's economy will expand 6.2 percent this year, the Economy Ministry says. Europe's economy may grow 2.4 percent, according to the European Commission. Europe accounts for the largest part of Ikea's sales, with 80 percent. The retailer opens about 20 stores a year, most in Europe. Dahlvig made the prediction for 15.5 percent revenue growth worldwide.

``We're at that pace and expect it for the coming few years,'' he said. ``Europe is the main driver, the U.S. slightly slower and the dollar weakness is not helping, as many goods are imported from euro-countries.''

Russian revenue will bolster sales in western Europe. In the U.K., government restrictions on building have restricted the number of stores. Ikea opened 16 stores last year in countries including Japan. Germany is the biggest single market, with 17 percent of sales, followed by the U.S. and U.K.

``China and Japan are the main expanding markets in Asia,'' Dahlvig said. ``We have two stores in Japan and we'll now start to expand on that because it's a very good market.''

Ikea, which works with 1,300 suppliers around the world, opened its first store in China in 1998 and entered Japan last year. It expanded into the U.S. in 1985, now its second-biggest market by sales, with 12 percent of total revenue.

The U.S. is an ``important'' market, where Ikea opens about three stores a year and plans to continue at that pace ``for a while,'' Dahlvig said. The U.S. housing slowdown could have ``short-term implications,'' though Ikea is taking a ``long-term perspective'' of the country, he said.

Sales at stores open at least a year are increasing about 7 percent this year, in line with forecasts, the CEO said.

The company was founded by Ingvar Kamprad, the world's fourth-richest person, according to Forbes Inc. He owns Ikea. Ikea Group is owned by the Stichting INGKA Foundation, a corporate entity registered in the Netherlands.