Ikea blames 'challenging' times for job cuts

Published on Wednesday 11 July 2007 00:33

IKEA has shocked the UK retail sector with news it plans to cut 300 managerial positions due to "challenging" trading conditions in the home furnishing sector, although the firm has yet to say where the cuts, expected to be in January 2008, will be made.

Ikea said in a statement that its UK operations needed to become "more productive, efficient, and flexible". The Swedish giant has 15 stores across the UK and 9,000 workers. Another two branches will open later this year.

"Today we recognise that the way in which we operate our units is not meeting the needs of our customers," Ikea said. "In addition the sector has had a couple of challenging years. Indications are that this will continue."

It added that it was also being affected by increased competition from supermarkets.

The announcement came as British Retail Consortium figures showed that sales growth accelerated in June, recovering from a six-month low, as consumers took advantage of price discounting.

The BRC/KPMG monthly sales monitor showed like-for-like sales rose 3 per cent last month on a year ago, compared with 1.8 per cent in May. Total sales, including new floor space, up 5.1 per cent on the year, picked up from 4 per cent in May. Although the three-month trend for like-for-like sales slowed, it still suggested higher borrowing costs may not have dented Britons' appetite to spend.

• Marks & Spencer sales rose 2 per cent in the three months to the end of June, the weakest growth for seven quarters.