By Helen Reid
LONDON (Reuters) – IKEA annual gross sales fell 5% after the Swedish funds homeware retailer reduce costs in a bid to draw extra buyers and preserve its share of a shrinking house furnishings market, but it surely expects a restoration subsequent yr.
Ingka Group, which owns most IKEA shops globally, reported 39.6 billion euros ($43.3 billion) in gross sales for its monetary yr ended Aug. 31.
“In all our markets we skilled a slowdown of the economic system and a slowdown of the house furnishing business, nearly concurrently,” mentioned Jesper Brodin, CEO of Ingka Group. “We by no means skilled something like that since 2008, to be sincere.”
After seeing a decline in retailer visits and bought portions, IKEA determined to chop costs, which boosted footfall and the quantity of merchandise bought, Brodin mentioned.
Ingka Group mentioned it invested greater than 2.1 billion euros in value cuts throughout its markets, and its share of the worldwide house furnishing market stayed regular at 5.7%.
IKEA has benefited from households buying and selling down as a world property slowdown damage confidence, mentioned Tolga Oncu, retail supervisor at Ingka Group.
For 2025, IKEA expects a lift to gross sales as decrease rates of interest drive extra individuals to maneuver home, which normally prompts shopping for of beds, sofas, and bookcases.
Retailer visits elevated by 3.3% to 727 million this yr, slower than the 7.4% development seen in 2023 and new openings fell to 41, from 60. Ingka plans 58 new places worldwide in its 2025 monetary yr.
Its share of gross sales made on-line elevated to twenty-eight%, up from 26% in 2023.
NOT GOING OUT AT CHRISTMAS
This vacation season, like final yr, Oncu expects individuals to spend extra time internet hosting at house reasonably than going out, with budgets nonetheless constrained by inflation.
Inter IKEA Group, which owns the IKEA model and manufactures the merchandise, reported annual gross sales of 45.1 billion euros ($49.3 billion) throughout all franchisees, of which Ingka Group is the largest. That was down 5.3% in comparison with 2023, largely resulting from value cuts as the price of uncooked supplies like wooden fell.
Inter IKEA CEO Jon Abrahamsson Ring mentioned extra value reductions had been deliberate for its 2025 monetary yr, which began on Sept. 1, however seemingly not as important.
($1 = 0.9143 euros)
(Reporting by Helen Reid; Modifying by Emelia Sithole-Matarise)