Ben Gilbert: uncertainty

Transcript context

…Simply just inferring from the financial statements, they don’t, because revenue is growing, e-commerce share is growing, and operating income is flat to declining. My only skepticism on it before truly issuing judgment there is maybe there’s something we’re missing since we don’t have full financials and we’re just looking at Ingka, which is the franchisee that operates the stores. Maybe there’s, I don’t know, but yeah, you and I ran the numbers, I’ll pull up the spreadsheet real quick. Starting in 2017, revenue continues to grow on the order of 5%-ish per year. But their operating margin drops from 8%, 6%, 5%, and hovers in this 3%–5% range the last few years. So something is happening that is making them less profitable. And seems like a fair assumption. It’s e-commerce. 2018, two big things happen. (1) They enter India, (2) Ingvar passes away in January, 2018 at age 91. Like we said, he’s working right up to the end. One poignant story we heard in the research is after one of the last board meetings that he was part of, he took the rest of the board members and management aside and said, I’m so jealous of you—he knows he’s coming to the end of his life—that you get to keep working in IKEA and running this business, and I don’t. This was his life.…

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