Cornel Oprisan, retail manager of IKEA Romania, the biggest domestic furniture retailer, says a drop in sales would not be a tragedy, since this is a temporary situation.
"Sales can go down for one week or month, but this does not mean the decline cannot be recouped after two weeks. Demand or needs are building up, they do not disappear. People need certain products. They may not be able to afford them at some point, but that does not mean they don't need them. There will come a time when they will be able to afford them, when they will have no other way but buy them," said IKEA Romania's boss.
IKEA Romania in the first three months of this year logged 5% higher sales from a year ago. The company is the only one in the industry that has so far announced rising figures, after Mobexpert announced a 5% drop in the quarter and Silvarom an over 30% decline. Elvila, a business controlled by businessman Viorel Catarama, reported 10% lower sales in the first four months of this year.
These companies' representatives are downbeat about the trend of sales in the following period, forecasting the downward trend will strengthen.
"We were counting on a higher growth rate. The fourth quarter of last year had a normal performance, though the financial crisis was felt," Oprisan said.
He says he boosted employee training during this period, in which the company annually invests hundreds of thousand euros.
IKEA last year registered a 4.4% profit margin domestically, down from the 7.8% level of 2007. Thus, the company had net income worth 14.5m RON (3.9m euros), down 4% from the 15.2m RON (4.6m euros) level reported in the nine months during which it operated in 2007.
"Hedging contracts, covering around a third of turnover, saved part of income. In 2009, we are in a period when we're assessing possibilities. These hedging contracts may prove to be harming at a certain moment as banks are now foreseeing a RON decline and a hedging contract is expensive. We're trying to find other solutions," Oprisan also said.
Asked whether he was upbeat about the future evolution of the furniture market and IKEA sales, he said he was trying to stay realistic.
The company has not given up the initially announced expansion plans, intending to open several stores in the following period. IKEA budgeted sales worth 110m euros for the financial year September 2008-August 2009, up 10% from a year ago. The domestic furniture market in 2008 rose by 14%, from 1.192bn euros to 1.355bn euros.
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