Sales grow yet profits decline at IKEA UK

IKEA UK has announced total sales of £2.2b for the year ending 31st August 2022, which marks doubledigit sales growth of +13% YoY. However, in line with rising costs, operating profits fell to £49.6m (from £61.2m in FY21).

Peter Jelkeby, country retail manager and chief sustainability officer, IKEA UK (pictured), says: “We saw consumers returning to our stores while online sales remained strong, with high demand for a convenient shopping experience. To meet these needs, we opened our first small store on the high street [in Hammersmith, West London], created new ways to meet customers remotely and in-store, and launched new ways to deliver orders.”

IKEA UK’s total online sales grew to 36% of the business’ total, compared to 19% in FY2019. However, store visits also increased by +34% YoY. IKEA invested nearly £50m in its fulfilment network, and announced the opening of a store on Oxford Street, London, plus new Plan & Order Points in the North West.

Major global and economic issues continued to impact material and transport costs, and IKEA UK’s operating margins fell to 2.3%, from 3.1% in 2021. Peter adds: “In the face of these changes, our longterm vision to create a better everyday life for the many people was our guiding compass for short- and long-term decisionmaking, and our results reveal the positive impact of this approach with healthy financial results representing our financial stability and resilience amidst great change.”

ScS acquires sofa-in-a-box brand

ScS has acquired the brand, domain names, website, intellectual property and stock of Snugsofa.com (Snug) from the administrator of Snug Shack for consideration of £875,000.

Snug, a digital-first sofa and sofabed business specialising in modular and re-configurable sofas, was founded by Robert and Peter Bridgman in 2018 as one of Europe’s first sofa-in-a-box concepts, and has grown to become one of the largest retailers in this segment. Although predominantly online, Snug also operates from one store in Leeds.

ScS CEO Steve Carson comments: “Snug is an exciting and young business with great potential. It has a strong and recognisable brand, a differentiated product and targets a market that complements our proposition.

“In that regard, it presents us with an exciting opportunity to further increase market share. We therefore, view it as a great strategic and cultural fit which reinforces our commitment to helping our customers create the home they love.”

ScS envisages adding Snug concessions to its stores, while the brand’s differentiated, digitalfirst offering is set to complement ScS’ existing proposition. Snug’s innovative approach to social engagement and digital marketing will be an asset to the wider ScS business, while Snug will benefit from the group’s expertise, supplier relationships and scale, says ScS.

A team from Evelyn Partners completed the sale, and says that in the 2021 financial year the brand recorded revenues in excess of £30m.

Snug’s 53 members of staff will join the group as part of the acquisition.

Ekornes to downsize global operation

Ekornes QM Holding, the owner of the Stressless brand, says it plans to “adapt production capacity and protect profitability to stay competitive” by downsizing its operations in Norway and Asia, and implementing further measures to manage cost and margin development.

With demand returning to pre-pandemic levels, combined with a general slowdown in the global economy and cost inflation putting pressure on margins (particularly in raw materials and transport), group earnings were negatively affected in Q4 2022.

“The market environment is changing and Ekornes must adapt production capacity and protect profitability to stay competitive,” says interim CEO Fredrik Ødegård Nilsen.

Ekornes thus plans to bring the scale of the organisation back to pre-pandemic levels. Operations in Norway will be downsized by up to 150 full time equivalents (FTEs), building on the reduction in operational capacity of 80 FTEs implemented in September. Moreover, support functions and headquarters will be downsized by up to 40 FTEs.

In the Asia Pacific region, Ekornes will concentrate operations in Thailand, discontinue activities in Vietnam, and reduce the workforce by approximately 700 FTEs. Ekornes has made substantial investments in the production facility in Thailand to enable the concentration of all Asian operations at one location.

Ekornes says: “The group views resilience and flexibility as key to ensure sustainable operations and long-term competitiveness. The effects of rightsizing operations in Norway, reorganising activities in Asia and the other initiatives are expected to materialise from the second half of 2023.”

Julian Bowen has appointed sales professional Jason Hillier to cover sales in London and the South East

Roseland Furniture has relaunched its web platform in collaboration with ecommerce specialist UWP (Underwaterpistol)

Minerva Furniture Group has appointed Jim Orr (ex-Furniture Village, Achica, Dreams) as CEO

Sleep Design Ltd (TA Crazy Price Beds) has been sold to portfolio businesses of Baaj Capital LLP, after the former went into administration in November. The sale saw its sites continue to operate, and all jobs secured

Funky Chunky Furniture has been certified to FSC standards (FSC-C177532) for its timber use

Hyve Group has announced the promotion of Alejandra Campos to event director of Spring and Autumn Fair. She will focus on Autumn Fair and Moda

The BFM’s latest wages survey highlights that the majority (69%) of member manufacturers have budgeted for pay awards this year, despite rising costs, with more than half planning to offer more than +4%

Next says full-price sales in the nine weeks to 30th December were up +4.8% YoY (some £66m better than the retailer’s previous guidance of -2% for the period). Both online and in-store sales exceeded expectations (the latter up +12.5% in Q4)

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