Ikea's global sales fell for a third consecutive year as the flat-pack furniture retailer struggled to entice budget-conscious consumers.
Total currency-adjusted sales slid 0.7% from a year earlier in the 12 months ended August to €43.8 billion ($44.6 billion), the Swedish company said in a statement. Inter Ikea Group — the entity that owns the Ikea concept and supplies products to its retailers — reported a 15% drop in operating profit to €1.46 billion.
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Mirroring the pain at other firms hit by the global cost-of-living crisis, the company said the period was marked by tough market conditions, with demand from retailers below the previous year. It largely kept prices stable even as it faced supply-chain disruptions in some regions that pushed up commodity and logistics costs. To counter those pressures and weak sales, the company stepped up efforts to cut costs, including reducing its workforce by 850 employees.
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“The most important for me is affordability,” Chief Executive Officer Jakub Jankowski said in an interview. “We need to continue to lower prices for our customers.”
In the company's annual report, Jankowski bemoaned the fact that sales have “stagnated for several years.” He said Ikea needs to return to growth to make affordable home furnishings available to more people.
In September, Inter Ikea and its retailers committed about €1.2 billion to a fresh round of price reductions across Europe. Inter Ikea lowered wholesale prices and retailers making additional cuts.
The moves extended an affordability push that included substantial price reductions in fiscal 2024. Those cuts helped lift wholesale volumes by about 6% the following year, but weighed on revenue and margins as sourcing costs and tariffs increased.
Jankowski said the latest reductions are already showing signs of working. European sales have grown during the first eight weeks of the new financial year, although he cautioned that it was too early to call it a sustained recovery.
“We are growing, so this is positive,” he said. “I would like to see a bit more time to pass with the good result to say that this is a stable trend.”
Photo Credit: Bloomberg
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Jankowski said the company had focused on restructuring operations that had become overly “complex and fragmented,” with the overhaul intended to make the organization simpler and faster. No new job cuts are planned beyond those already announced.
Ikea has also been reshaping its store network, with retailers across Europe and North America continuing to open smaller formats. The company has also decided to close seven stores in China as it adapts to a faster shift toward online shopping and home delivery.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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