CONSHOHOCKEN, PA -- IKEA Group total sales grew by 6.9% to €24.7 billion in FY11. The revenue, including sales and rental income from commercial property, amounts to €25.2 billion. Net profit increased by 10.3% to €2.97 billion thanks to increasing sales and improvements in the cost structure. In spite of increased raw material costs, IKEA lowered prices to customers by 2.6% while the quality of products improved. Also, during FY11, US comparable store sales grew by 7% building on a 5% growth in fiscal year FY10. A key contributor was aggressive price investments (new lower pricing strategy) on top selling products. This is part of the long term strategy to make IKEA home furnishings accessible to as many people as possible.
“Today, when nations and people face economic challenges, IKEA is more relevant than ever. We are committed to creating a better everyday life at home by offering beautifully designed and functional home furnishing solutions at affordable prices. In FY11 we continued to grow in both mature and emerging markets, we opened seven new stores and welcomed 4,000 new co-workers. Our profit is re-invested in the company and enables long-term innovation, such as finding better, more sustainable solutions and alternative raw materials,” says IKEA Group President and CEO Mikael Ohlsson.
IKEA works hard to build a more sustainable range. This includes responsibly sourced materials, smart design and better transport solutions. A fresh example is swapping traditional wooden pallets for newly designed paper ones. In FY11, IKEA continued to invest in renewable energy sources, such as wind parks and solar panels. Today, with 60 wind turbines and solar PV systems in 40 IKEA units, more than half of the energy is supplied through renewable sources.
The IKEA Foundation increased donations to approximately €65 million during FY11. The vision of the IKEA Foundation is to improve the opportunities of children and youth in the developing world to create a better future for themselves and their families. 100 million children will benefit from current program commitments by 2015.
US RESULTS: “Both our global and US sales results show that people are finding IKEA a great place to shop for well designed home furnishing solutions at great prices. With our FY11 comp store sales up 7%, it’s evident that what we offer is relevant to more and more US customers. We remain dedicated to growing even stronger as the leader in life at home, as well as a responsible partner in living a more sustainable life, while supporting our communities with socially responsible programs,” commented Mike Ward, IKEA US president.
US SALES AND SERVICES: In FY11, IKEA US reduced some important IKEA products like the HOVAS sofa from $699 to $499, HEMNES queen bed frame from $299 to $199, PAX LYNGDAL wardrobe from $800 to $549. These price reductions were due to shipping larger quantities through flat packing, keeping designs smart and efficient and not compromising quality.
Additionally, IKEA US made its mark by continuing to offer relevant home living solutions. As people in the US are spending more time at home, everyday ‘living situation’ requirements are changing. This includes a need for larger seating spaces and more entertainment solutions. Consequently, IKEA US saw an increase in sofas such as KIVIK which offers the ability to create larger seating configurations. Also, now that there is an average of 2.9 TVs in each American home, the need for media solutions for flat screens as well as storage for digital games has increased. Consequently, the IKEA BESTA family of TV/Media storage solutions has shown great growth.
Another contributor to US growth has been the introduction of two important new initiatives: lower flat rate prices for home delivery and a picking service where a customer’s order is gathered and delivered. The starting price for these combined services is $99.00 for the majority of IKEA US customers and is based on any size order.
US SUSTAINABILITY INITIATIVES: IKEA US is in the midst of investing $150 million in Photovoltaic systems covering almost 85% of IKEA US roof tops. During FY11, IKEA made investments in adding solar panels on 11 US units. Upon completion, these 11 systems combined will generate 6,800 KW of electric power. The individual systems will provide anywhere from 20% to 70% of the electricity needs of the unit upon which they are installed, and will reduce 7,700 tons of CO2. Additionally, 17 new installations will be completed in FY12. IKEA US also completed its first Geothermal project with the opening of its 38th store near Denver, CO.
Other activities include: the announcement to install 9 Electric Vehicle Charging Stations in the West; phasing out of all incandescent light bulbs in all its US stores to promote only energy efficient lighting; the completion of planting nearly 2 million trees across America with American Forests – to offset CO2. IKEA US remains a dedicated partner to Save the Children, not only globally but here in the US with its Early Steps to School Success literacy program
IKEA Group Yearly Summary, called “Welcome inside” and IKEA Group Sustainability Report FY10, are available on www.IKEA-USA.com. The IKEA Group Sustainability Report FY11 will soon be published.
*The fiscal year 2011 of IKEA runs from September 1 2010 to August 31 2011
IKEA strives to be ‘The Life Improvement Store,’ and since its 1943 founding in Sweden, has offered home furnishings of good design and function, at low prices so the majority of people can afford them. There are currently more than 320 IKEA stores in 38 countries, including 38 in the U.S. IKEA, the world’s leading home furnishings company, incorporates sustainable efforts into day-to-day business and supports initiatives that benefit children and the environment. For more information, go to IKEA-USA.com.
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