ECONOMY

Fourlis 2006 revenues to get boost from IKEA stores’ franchise

Fourlis, the Greek franchise of Swedish furniture and home furnishings giant IKEA, announced on Friday it would meet its 2006 financial targets due to strong growth, largely thanks to a home-buying boom. Analysts say Fourlis is getting a strong boost from its IKEA stores, with the Greek furniture market thriving on the back of increased home ownership, thanks to low real interest rates. Revenues from the two IKEA stores it currently operates in Greece accounted for 44 percent of the group’s turnover of 407.5 million euros ($516.1 million) last year and are among the highest of around 30 IKEA franchises around the world. «We are confident we will achieve our guidance,» Fourlis Chairman and Chief Executive Officer Vassilis Fourlis told Reuters in an interview. «All divisions are on budget.» Fourlis, which is also active in the wholesale of electronic and electrical appliances and retail sportswear, has said it expects pretax profits of 34 million euros and sales of 448 million euros this year, up 20 percent and 10 percent year-on-year respectively. The retailer plans to further expand IKEA stores in Greece and Cyprus next year. «We estimate the [new] outlet in [western] Athens will open in September 2007. The Cyprus outlet [will open], June 2007,» Fourlis said. Fourlis said he expected annual revenues of 40 million to 50 million euros from the Cyprus outlet in the next three years and more than 200 million euros from the two stores in Greece. Eye on the Balkans Fourlis will then expand into the Balkans. The retailer said it was looking for the appropriate location to open its first IKEA store in Bulgaria in 2008. «We are trying to choose the right place right now. If we rent a place, the investment will be very low. It will not exceed 4-5 million euros,» Fourlis said. Fourlis said the firm decided not to sell its remaining 20 percent stake in top Greek electrical goods retailer Kotsovolos. The company sold a 21.5 percent stake in Kotsovolos to Dixons in 2004 and agreed to sell the remaining 20 percent to the British group by 2009 at a minimum price of 32 million euros. «We decided not to exercise our option at this moment,» Fourlis said. «We believe we could get more than 32 million euros, which is the minimum, next year.» He said the company would possibly pay a higher dividend this year if it meets its full-year targets. «If the year closes in line with our estimates, it is very likely there will be at least a 20 percent rise in the dividend compared to last year,» Fourlis said. The firm paid a 0.15-euro-per-share dividend in 2005. Fourlis trades 28.7 times its 2006 estimated earnings, at a premium to a 20 P/E ratio for the European household appliances sector. Analysts said the company trades at a premium on expectations its IKEA expansion next year will boost profits. Its stock has gained 17.8 percent year-to-date, outperforming the broader Greek market by 9.2 percentage points.