The headline figures suggest IKEA posted lower profits and higher sales last year. But that paints far from the full picture at the UK's largest home furnishings retailer.


While profits at its main Opco fell 38 percent to £86.7 million, earnings at its UK property arm jumped more than four-fold to £70.4 million (2016: £17m).

IKEA doesn't post consolidated accounts for its British based subsidiaries, which would iron out the impact of intra-group trading across its various divisions.

This makes it difficult to see the full story, but adding together the earnings of the two largest IKEA UK divisions alone — a total of £157.1 million compared with £156.8 million 12 months prior — highlights the folly of assuming the wider IKEA corporate family had a worse year from an earnings perspective.

And what of sales?

These increased by 5.7 percent, equivalent to about £98 million, to a total of £1.81 billion for IKEA's principal retail operating company.

IKEA put the bulk of that down to a first full year contribution from Reading, which opened at the end of the previous financial year.

We already knew — thanks to a press release issued last autumn — that IKEA online sales rose 10 percent during the period to represent one sixth of all UK revenue.

That means Internet sales of around £270 million, an increase of about £25 million compared with the previous year.

It shouldn't be forgotten too that IKEA has recently opened a handful of small format order-and-collect stores on retail parks around the UK.

If — based on performance at other full-line stores over the years — we assume Reading generated around £100 million in sales and that online sales contributed an extra £25 million, IKEA's underlying like-for-likes would already be in negative territory, even before considering the smaller format shops.

Rather than declining profits on higher revenue, perhaps widening margins on softer sales performance more accurately reflects IKEA in 2016–17?

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