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Emerging markets boost Ikea profits by over 10%

Ikea's flat-pack furniture empire found a growing number of fans in emerging markets last year, helping to boost profits by 10% and offsetting tougher conditions in the UK.

The Swedish company, which has 287 stores in 26 countries after opening seven new sites, said sales grew 6.9% to €24.7bn (£19bn) in the year to August 31, with Russia, China and Poland leading the way.

Group president and chief executive, Mikael Ohlsson, said: "Today, when nations and people face economic challenges, Ikea is more relevant than ever."

Last month, the company announced a 3% fall in sales at its 18 UK stores to £1.15bn after it suffered in the consumer spending squeeze and a stagnant housing market.

But growth in most other countries, as well as cost reductions and lower interest payments, helped profits rise 10.3% to €3bn (£2.5bn) despite a slight drop in its gross margin.

It claims to have lowered prices by an average of 2.6% without sacrificing quality to help attract customers as many of its markets around the world fight economic gloom.

Ikea opened stores in China, Germany, Italy, Norway, Russia, Switzerland and the US in the year, creating 4,000 jobs.

It plans to invest €3bn (£2.5m) on its expansion plans this year and is also considering its first move into India.

The company has already opened sites in Australia, Russia, France, Switzerland and Spain in the current year and plans other openings in China, Japan, Finland and Italy.

It has not opened a store in the UK since Southampton in February 2009, but re-submitted a planning application in Reading last week and is looking at other sites in Britain.

The company said last month it had increased its share of the home furnishings market in the UK from 6.1% to 6.3% despite falling sales.

The market was among the worst hit by the consumer spending squeeze.