Ikea finds gloomy Britain is a drag as its global profits rocket

Ikea, the flat-pack furniture giant, has posted a leap in global profits and sales, driven by market share gains in most of the countries in which it operates.

But the retailer's sales fell in the UK in its last financial year, as it was hit by the downturn in consumer spending and the moribund housing market.

Ikea, which has 287 stores in 26 countries, posted a 10.3 per cent jump in net profits to €2.97bn (£2.48bn) over the year to 31 August, driven by a rise in total sales and reduced costs.

Mikael Ohlsson, the chief executive, said: "Despite price increases for many raw materials, we have lowered prices to our customers by 2.6 per cent."

mr Ohlsson added that group sales had performed better since the end of August, despite the spiralling eurozone crisis and the turbulence in financial markets. He said: "We are becoming a more natural choice when people are looking after their spending or are concerned about the future."

But the retailer suffered a 3 per cent drop in UK revenues to £1.1bn and like-for-like sales fell by the same amount.

Ikea's former UK country manager, Martin Hansson, said: "Low consumer confidence, coupled with the stagnant housing market has resulted in another tough year." Mr Hansson swapped jobs with Ian Duffy, Ikea's group regional retail manager in Asia Pacific, this month. In taking over, Mr Duffy is Ikea's first British boss to run the retailer here.