Business

Tenants' sales at IKEA's shopping malls grow 16%

3 minute read

Furniture brand IKEA flags are seen next to a shopping mall owned by IKEA's malls arm Ingka Centres, on the outskirts of Stockholm, Sweden August 23, 2020. REUTERS/Anna Ringstrom

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STOCKHOLM, Nov 1 (Reuters) - IKEA's shopping malls business, one of the world's biggest, said on Monday its tenants' sales were up 16% at constant exchange rates in the 12 months through August, to 6.6 billion euros ($7.6 billion).

Ingka Centres, which has 47 malls anchored by IKEA stores across Europe, Russia and China and plans to enter North America and India, said footfall was up 1% as visits fell 13% in Europe due to lockdowns but increased in Russia and China.

The company opened two new centres towards the end of the fiscal year, in China, taking its leasable area to above 4,000 million square metres.

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Its occupancy rate was roughly stable at 94%, it said in an emailed statement.

In the previous fiscal year, footfall dropped by almost a quarter and tenant sales fell 16% due to the pandemic and restrictions and lockdowns to curb it.

Managing Director Cindy Andersen told Reuters that while footfall remained below pre-pandemic levels, spending per visitor was up from last year.

Like IKEA, Ingka Centres has tweaked its strategy in recent years towards adding mainly smaller urban locations as it adapts to changing shopping behaviour.

It is hunting for property in major European and North American cities, and in 2020 inked its first such acquisitions, in London and San Francisco.

Andersen said the pandemic had not affected investment plans overall although expansion could be delayed.

"There could be certain delays but I would say the plans are continuing, and we are also trying to accelerate all developments in the pipeline," she said in an interview, adding there was still a lot of uncertainty about market conditions in the current fiscal year due to the pandemic.

While IKEA opened its first inner-city store in 2019, in Paris, Ingka Centres is due to open its first such mall in the coming months, in London. read more

Andersen told Reuters Ingka Centres' first opening in North America was now planned for Toronto in 2022, followed by San Francisco later in the year after a delay from 2021.

The company said H&M (HMb.ST), Fast Retailing's (9983.T) Uniqlo, Starbucks (SBUX.O) and Inditex' (ITX.MC) Zara were among global brands adding stores in its malls during the year. In all, around 1,000 stores opened.

Ingka Centres is part of Ingka Group, which owns most IKEA stores worldwide. Its centres include the Mega brand in Russia and Livat in China, where it has just inaugurated its 6th centre, Livat Nanning. read more

Andersen said current global supply chain disruptions had so far had little impact on Ingka Centres' ongoing construction projects.

($1 = 0.8654 euros)

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Reporting by Anna Ringstrom; Editing by Jan Harvey, Kirsten Donovan

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