By Daniel Hunter

Swedish retailer IKEA, known for its flat-pack furniture, has reported flat annual profits despite growing sales.

IKEA reported profits of €3.3bn (£2.4bn, $3.7bn) for the year to August 2014, while sales were up 5.9% to €28.7bn.

Increased spending on employee loyalty and bonus programmes prevented its profits from growing.

Chief executive Peter Agnefjall said: "North America performed well and while the challenging economic situation may not be over, Europe continued to show improvements.

"An especially positive sign was the growth in most of southern Europe,"

IKEA said it is on course to achieve its target of €50bn in sales by 2020.

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