Ikea, the world’s biggest furniture retailer, said last year’s VAT cut did nothing to stimulate its UK sales and that the planned rise next year will be equally insignificant.
Despite being a leading big-ticket retailer, Ikea UK head Martin Hansson said: “We did not see any impact at all from the VAT change and I don’t think we’ll see an effect when it comes back up in January either - 2.5% is not a tipping point for us.”
Hansson said Ikea had “quite a rocky year” in the 12 months to August 31, when turnover increased 1.1% to £1.2bn, but that sales were beginning to pick up again.
Hansson said: “It’s been one of the toughest years but we’re quite happy with the results. The past few months have been positive for us. We are seeing growth, but we are up against weak comparables.”
He added that next year is “pretty unpredictable” because of the uncertainty around a potential change of government and rising unemployment. Hansson said the UK is more or less “on a level” with the rest of the group now, after Ikea’s then global boss Anders Dahlvig told Retail Week in May that the UK was among the group’s worst performing territories.
Hansson would not reveal profits or like-for-like figures for the year to August 31, but warned the uplift in revenue was “influenced by the new Southampton opening”.
Ikea piloted self-service tills in its last financial year and will roll them out to all stores after “positive feedback” from customers. “The customers are really happy, it gives them the ability to choose,” Hansson said.
The retailer is also changing tack on sourcing and plans to source more from local UK manufacturers. Hansson said although Ikea might have to pay more for product as a result of the switch, it would benefit from lower transport costs while limiting environmental impact and helping “generate more jobs in the UK”.
Rent-to-own electricals and furniture retailer BrightHouse also said the VAT rise in January will not affect sales as it revealed like-for-likes climbed 9.9% in the six months to September 30.
Revenue jumped 15.6% to £94.6m while EBITDA rocketed 23.7% to £14.6m. The retailer expects to break through the £100m turnover barrier before Christmas.
Chief executive Leo McKee said: “The VAT increase won’t be a big thing. Customers won’t buy in December as a result.”
McKee added that rising furniture sales had helped BrightHouse deliver its strong performance.