IKEA Annual Sales Decline

By Helen Reid

LONDON (Reuters) – IKEA's annual sales decreased by 5% as the Swedish budget homeware retailer reduced prices to draw in more customers and retain its market share amid a contracting home furniture sector. However, a recovery is anticipated next year.

Ingka Group, which operates most IKEA stores worldwide, announced sales of 39.6 billion euros ($43.3 billion) for the financial year ending August 31.

CEO Jesper Brodin stated, "In all our markets we experienced a slowdown of the economy and a slowdown of the home furnishing industry, almost simultaneously. We never experienced anything like that since 2008."

Facing a drop in store visits and product sales, IKEA opted for price cuts, which increased foot traffic and product sales, Brodin noted.

The Ingka Group invested over 2.1 billion euros in price reductions across various markets, maintaining its global home furnishing market share at 5.7%.

According to Tolga Oncu, retail manager at Ingka Group, IKEA has benefitted from households opting for lower-cost options amid a global property slump that has dampened confidence.

For 2025, IKEA anticipates a sales boost as lower interest rates are expected to encourage more people to move, prompting purchases of beds, sofas, and bookcases.

Store visits rose by 3.3% to 727 million this year, slower than the previous year's 7.4% growth, and new openings fell from 60 to 41. Ingka plans to open 58 new locations worldwide in its 2025 financial year.

Online sales accounted for 28% of total sales, up from 26% in 2023.

Less Festive Spending This Christmas

This holiday season, Oncu forecasts that consumers will likely spend more time entertaining at home rather than going out, as budgets remain tight due to inflation.

Inter IKEA Group, which owns the IKEA brand and manufactures products, reported annual sales of 45.1 billion euros ($49.3 billion) across all franchisees, a decline of 5.3% from 2023 primarily due to price cuts as raw material costs, such as wood, fell.

Inter IKEA CEO Jon Abrahamsson Ring indicated that additional price reductions are planned for the 2025 financial year, which commenced on September 1, though these are not expected to be as substantial.

($1 = 0.9143 euros)