April 10, 2018 / 6:26 PM / 2 years ago

IKEA Group CEO expects healthy growth to fund strategy shift

STOCKHOLM (Reuters) - IKEA Group will finance spending through healthy sales growth and existing capital over the next three years as the furniture giant adapts to fast changing shopping habits, its CEO said.

FILE PHOTO: IKEA Group Chief Executive Jesper Brodin poses at an IKEA pop-up kitchen showroom downtown Stockholm, Sweden, October 10, 2017. REUTERS/Anna Ringstrom/File Photo

IKEA, which is seeing the surge in e-commerce and home delivery dim the appeal of its classic out-of-town warehouse stores, flagged last year it might add full-range city-centre showrooms to its channels.

Jesper Brodin, CEO since September of IKEA Group, which owns the bulk of IKEA stores, confirmed in November he would focus on developing such formats alongside online store and services, and new CFO Juvencio Maeztu said last month investment levels would stay high in coming years.

“To make this happen, our second priority is to be very ambitious on the growth side,” Brodin told Reuters as he laid out his strategy plan for the three years through August 2021.

“Saved-up capital will be part of the financing, the other part will be about creating further capital through good healthy growth,” he said in an interview.

Brodin saw sales growth at existing stores as well as from new formats, but said raising prices was not on the cards.

A new IT platform piloted in Britain will soon cater for more efficient e-commerce and deliveries to customers, he added.

“We have closed the pilot and the aim is to have rolled out the new order orchestration and web platform to all markets by February 2019,” he said.

IKEA Group, which owns 362 stores and is the biggest franchisee to brand owner Inter IKEA, last year grew retail sales by 4 percent to 34.1 billion euros (29.7 billion pounds).

Brodin said IKEA Group would focus on growing in existing markets such as China and the United States, with a particular focus on India where a first store is planned to open in July.

Brodin said the group is currently in the midst of reviewing its store opening strategy, adding that some planned new out-of-town stores will now not happen, while others may be converted to the new city-centre formats.

Reporting by Anna Ringstrom; Editing by Alexander Smith

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