Dairy Farm to buy Ikea stores

PUBLISHED : Wednesday, 30 October, 2002, 12:00am
UPDATED : Wednesday, 30 October, 2002, 12:00am

Dairy Farm International Holdings is to buy the Hong Kong and Taiwan operations of home furnishing retailer Ikea for US$27 million.

Earlier this month, Dairy Farm said it would expand into South Korea's retail market by investing US$5 million in a joint venture to own and operate a health and beauty chain called Olive Young.

Under the deal, Dairy Farm will buy four Ikea stores in Hong Kong and one in Taiwan from Jardine Pacific Holdings, a Jardine Matheson Group affiliate.

Howard Mowlem, group finance director, said Jardine Pacific's interim report showed slightly weaker sales at Ikea stores due to the difficult retail conditions. Last year, Ikea's Hong Kong and Taiwan businesses contributed US$5 million of net profit to Jardine Pacific.

Ed Chan Yiu-cheong, Dairy Farm's regional director for North Asia, admitted Hong Kong's retail industry faced a number of challenges such as 40 months of deflation. But he expressed confidence in the market.

He said Taiwan had much growth potential with only one store. 'The price has taken into account all current circumstances . . . the market may be different from time to time,' he said. 'Now is the right time to buy.'