Ikea Singapore FY20 revenue falls 10.9%; hiring staff for new Jem outlet

SWEDISH home goods giant Ikea's Singapore operations reported S$304 million in turnover for its fiscal year ended Aug 31, 2020, down about 10.9 per cent from S$341 million for the previous year.

The company also announced on Tuesday plans to hire an additional 200 workers in Singapore as it prepares to open in 2021 its store at Jurong East suburban mall Jem. It did not provide a breakdown of the number of hires for each outlet in the country.

Jaap Doornbos, Ikea retail director for Singapore and Vietnam, told The Business Times that the Singapore stores endured the longest pandemic-related closures among its outlets in the region - spanning 73 days. "Our Ikea food operations were closed for even longer, and we have curtailed operations even after reopening," he said.

"Given these challenging circumstances, we are very satisfied that the turnover dropped just 10 per cent - half of the share of the days that the stores were closed."

The retailer's performance in Singapore were driven by a strong e-commerce business and the continued interest in home furnishing, Mr Doornbos added.

Its two full-format stores in the city-state are located in Tampines and Alexandra. The company in May announced the new Jem outlet, which will be its first small-store concept in South-east Asia, whereby Ikea becomes a tenant within a mall instead of establishing another of its iconic warehouse-format blue buildings.

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The financial results in Singapore were in line with the performance across other South-east Asian markets, as the home furnishings retailer closed out what it described as its "most challenging financial year" amid the coronavirus pandemic.

Overall, the nine Ikea stores in the region generated S$966 million in sales during the latest financial year, shrinking by 7.4 per cent, after facing business closures of up to 2.5 months, supply challenges and limits on building capacity.

Combined with rental income from the five Ikea-anchored shopping centres in Malaysia and Thailand, the South-east Asian business' turnover totalled S$1.1 billion, down about 8.2 per cent or S$90 million from the previous year.

Ikea noted that the five malls' operator Ikano Centres had provided rental relief to "hundreds" of tenants to help tide them over the Covid-19 pandemic.

In Malaysia, revenue - comprising retail sales at four stores and rental income from four shopping centres - amounted to S$472 million for the year.

The Thailand business - with three stores and one mall - brought in S$344 million in turnover.

Meanwhile, visits to Ikea websites in Singapore, Malaysia and Thailand totalled about 77 million between Sept 1, 2019 and Aug 31, 2020, up 46 per cent year on year.

The number of online orders placed in the three markets also more than doubled from the year before to 525,418 during the fiscal year, ringing up some S$135 million in e-commerce sales.

Ikea stores in the region were "largely able to continue selling" during the long closures amid the pandemic, thanks to its e-commerce operations running in all three markets for the first full year.

The Singapore, Malaysia and Thailand stores and Ikano Centres are operated by Ikea Southeast Asia & Mexico - one of the 12 Ikea franchisees around the world.

The franchisee is making its foray into the Philippines and Mexico - with an Ikea store in Manila and another in Mexico City opening in 2021.

There are also plans to enter Vietnam, with a team working to open a store there "in the years ahead", it said on Tuesday.

Christian Rojkjaer, managing director of Ikea Southeast Asia & Mexico, said that restrictions amid the Covid-19 outbreak caused people to turn to the retailer to set up their home offices, study corners, outdoor living areas and functional kitchens.

During eight peak weeks at the height of the pandemic, South-east Asia customers snapped up more than 212,000 Ikea desks and 64,000 office chairs. Annual sales in the workspaces product range were also up in Singapore, Malaysia and Thailand, the company said.

Mr Rojkjaer added: "We were under incredible pressure and we did not always manage to meet our customers' expectations, but most were understanding."