Ikea's profits remained flat last year despite rising sales – because the Swedish retailer contributed a vast sum to an employee loyalty programme.
The world’s biggest furniture chain reported a net profit of €3.3billion for 2013-14. The figure was held back by the €200 million programme, as well as by and more staff taking part in a bonus programme.
Ikea, which has 222 of its 315 stores in Europe, said on Wednesday that total revenue increased by 2.8 per cent last year to €29.3 billion. It did not give a separate figure for Europe, where it makes almost 70 per cent of its sales.
And the privately-held company said it expects a rise in European revenues to continue this financial year, with its focus on low prices helping it to cope in a struggling economy.
"We've seen a strengthening situation where consumer spending continues to increase, more people visiting the stores and buying more home furniture," chief executive Peter Agnefjall told Reuters at the firm's Wembley store, in London.
"We don't see any indication that that trend should change as we speak," he said.
Lower purchasing and transport costs helped Ikea to reduce prices by an average of 1 per cent in 2013-14.
However, a weak Europe remains a challenge for a group aiming to grow sales to €50 billion by 2020, which would require an increase of 9-10 per cent a year - well ahead of the current growth rate.
Agnefjall said that goal was a "guiding rail" rather than a "target hammered in stone".
Having opened 12 stores in 2013-14, IKEA is likely to expand at a similar rate this financial year, with a first opening in India a possibility, Agnefjall said.
"We had 716 million visits to our stores (in 2013-14) but there are 7.2 billion living on this planet, so IKEA is just at the beginning," he said.
Additional reporting by ReutersReuse content