IKEA expects to report revenue increase

By Santiago Perez
Dow Jones Newswires
Published: Monday, April 2, 2007 12:34 a.m. MDT
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BARCELONA, Spain — Swedish home furnishings retailer IKEA expects to report an increase of more than 13 percent in revenue this year to about 19.6 billion euros ($26.1 billion), president and chief executive Anders Dahlvig said last week.

The company, which operates close to 240 IKEA stores in 35 countries, including 29 in the United States, expects to report a 7 percent increase in same-store sales this fiscal year, Dahlvig said at a meeting with reporters on the sidelines of the World Retail Congress. Same-store sales strip out the impact of new stores on sales growth.

"Historically, we double our sales every five to six years," Dahlvig added. The company reported 17.3 billion euros in total sales for its 2006 fiscal year, which ended in August.

IKEA printed 176 million catalogues this year, 10 percent more than in 2006, making it the world's largest publication in terms of circulation.

The Swedish group has expanded aggressively across the United States and Europe in recent years and has gained strong brand recognition due to its modern furnishing designs and competitive pricing.

"We price according to competition," Dahlvig said. "It's market pricing."

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Dahlvig, 49, took over the company as president and CEO eight years ago, a time when IKEA's revenue amounted to about 7 billion euros.

He said a slowdown in the U.S. housing market could have an impact on revenue because of the "big link" between housing starts and home furnishing demand. U.S. operations contributed about 12 percent of IKEA's total sales last year, making that market the company's second-largest revenue contributor after Germany, which generated 17 percent of total sales.

"Japan and China are two countries where we are expanding now," Dahlvig said. The company plans to open about two stores per year in China and one to two stores annually in Japan. It has also studied setting up shop in India, but restrictions limiting foreign ownership of retail companies there to 51 percent "represent a limitation."

IKEA could also jump into Latin America, although the need to set up a "whole supply infrastructure" due to geographical challenges may result in a long-term enterprise.

"Mexico could be a possibility" due to its proximity to the United States, Dahlvig added.

Privately-held IKEA has its North American headquarters in the Philadelphia suburb of Conshohocken, Pa.

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