IKEA posts record full-year profit

World No.1 furniture maker IKEA Group said it saw signs that consumer spending was starting to recover in many of its markets and posted record full-year profits on Tuesday.

Retailers have been struggling particularly in Europe, where IKEA generates nearly 70 percent of its sales, as the global economic downturn and austerity measures, mostly in eurozone countries, hurts consumer sentiment and spending power.

IKEA, whose warehouse-like stores sell everything from highchairs to fitted kitchens, posted a net profit of 3.3 billion euros ($4.51 billion) in the 12 months through August 2013, up 3.1 percent on a year earlier.

"Consumer spending is improving in many countries," IKEA CEO Peter Agnefjall said in a statement. "While the challenging economic situation may not be over, there are positive signs."

IKEA said it had seen strong growth in China, where it opened two new stores, as well as in Russia and the US.

Southern Europe, still suffering from the effects of the downturn, was showing some positive signs, but sales fell in Spain and Italy, the company said.

Figures published in October showed that while sales at IKEA rose 3.1 percent to 27.9 billion euros in the 2013 financial year, sales in comparable stores grew by 1.8 percent.

The company said it planned to invest 2.5 billion euros this fiscal year in stores, factories, renewable energy and shopping centers.

Growth will mainly be in existing markets - in China it has opened 11 stores in a decade, but also in new markets such as India, where it plans to cash in on demand from a growing urban middle class.

But while IKEA enjoys instant brand recognition, it faces increased competition.

Companies such as German firm Home24, for example, are betting shoppers will increasingly look online for furniture as they are doing in growing numbers for products like fashion and food.

While IKEA sells online in half its 26 markets, it has been relatively slow to embrace the Internet.

Research firm Euromonitor forecasts global e-commerce sales of home furnishings will grow almost 10 percent a year to $24 billion by 2015 from $20 billion in 2013.