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IKEA Posts Record Sales

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Swedish furniture giant Ikea posted record earnings this year, but after a decade of booming expansion it now sees growth slowing, its director told financial daily Dagens Industri. Ikea, which has never been listed on the stock exchange and rarely provides insight into its financial situation, registered sales of 21.2 billion euros (30 billion dollars) in its fiscal year that ended in August, managing director Anders Dahlvig told the newspaper's online edition. The sales figure was the strongest ever recorded for the company since it was founded in 1943 and triple the figure from 1999, the paper said. "It feels good of course. But it's not in my job description to be satisfied," Dahlvig said, refusing to be drawn on the family-owned company's profit. "We never reveal how big our profit is, for competition reasons." He did disclose however that the do-it-yourself chain was already feeling the effects of the global economic downturn and said growth had begun to shrink. Sales for the period were up by seven percent from the previous year, compared to a 14-percent rise a year ago. "The decline is in part due to currency effects, and the increase with a stable exchange rate was 10 percent. But we are not immune to this strong a downturn in the economy," Dahlvig said. He said the company was facing its toughest challenge in a long time. "We have probably underestimated the intensity of the slowdown. This time it's very much about a crisis in the housing sector, which of course hits us very hard since we sell home furnishings," he said. "The economy is also unfortunately extremely weak in several of our biggest markets, such as Germany, the United States and England," he added. Scandinavia, Asia and eastern Europe make up a smaller proportion of Ikea's sales and the fact that those markets are faring better compensates little. According to Dagens Industri, Ikea has in recent years stashed away profits of "at least 160 billion kronor (24 billion dollars, 17 billion euros) ... which could be a pot of gold if the economic downturn turns out to be lengthy." Dahlvig said the company's "strong economy was a very big advantage." "It means that we can continue to invest heavily both in expansion and efficiency measures. Together with our low prices, we see good opportunities to increase our market share significantly in the weaker economy," he said. Ikea opened 22 new stores last year and plans to open 20 more this year but will then apply the brakes. "We plan to slow down the pace from 2010 and reduce the number of store openings from 20 to 25 per year to 10 to 15," he said, noting that "we are so big in our biggest market Europe that there is less opportunity for new stores." He did not rule out the possibility of job cuts in the future, though Dagens Industri said it was more likely the company would continue to hire. For the period under review, the number of employees rose by 10,000 to almost 130,000.

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