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Flat-profit Ikea to focus more on digital?


Neither a surge in online sales nor a rebounding U.S. economy has been enough to lift Ikea, as the global furnishings retailer reported flat profits for 2014.

Ikea, which operates 315 stores in 27 countries, said net profit for its fiscal year through August rose 0.4% from the previous year to $3.76 billion, far slower than the 3% growth the retailer logged last year, and its 8% growth in 2012.

Analysts say the results show that IKEA is sticking to its strategy of lowering prices and broadening its e-commerce offering.

“North America performed well and while the challenging economic situation may not be over, Europe continued to show improvements,” the company said in a statement. “An especially positive sign was the growth in most of southern Europe where Portugal did particularly well and the situation in Spain is improving quite quickly.”

Sales grew 5.9% from the previous year to $33.2 billion, Ikea said. But that rise was offset by the costs of higher wages for its employees, new employee programs and price reductions. In the United States, where Ikea operates 40 stores, same store sales grew 4.2% last year, slowing from growth of almost 7% in 2013 and 8 percent in 2012.

Ikea has been slow to move into the digital marketplace, preferring to invest in its brick-and-mortar supercenters instead. Meanwhile, shoppers and other retailers have been moving increasingly online.

E-commerce sales at Ikea did jump 35% last year from a year earlier, but the store still doesn’t offer most of its inventory online.

Ikea says it eventually hopes to offer as much as 90 percent of its products online. It is also investing more in its shipment services, and made 40 percent more home deliveries in the United States last year, the retailer said.

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