Business Review

We continued to invest in the future growth of our Home Furnishings business in 2019. Sales grew 6% to a record US$766 million. Taiwan and Indonesia both reported strong sales growth, with two new store openings. In addition, e-commerce growth was also strong across all markets with investments made to support website functionality. Like-for-like sales in Hong Kong, however, were impacted in the second half by the social unrest.

The IKEA team continues to innovate from the perspective of store format with the conversion of the Giant hypermarket in Sentul, Indonesia to an IKEA store, a good example of taking a holistic view to space optimisation. The store was opened in November, only five months after handover and was the fastest ever IKEA store opening in history and the first ever hypermarket conversion. Performance for the store since opening has been pleasing. IKEA also introduced a pick-up point format in Bandung, Indonesia in September 2019, a year ahead of the official store opening in 2020.

Our investments into new stores, higher cost of goods as well as currency fluctuations impacted operating profits in the short-term. However, we remain confident in the future prospects of IKEA across the region. Our first store in Macau will open in the first half of 2020. In addition to a new store opened in Southern Taipei in 2019, good progress has been made with new store projects in Taiwan as well as in Indonesia, which are anticipated to open in 2020. Our strategic plans to meet the demands of the growing middle-income consumer involve opening traditional and new IKEA formats.