Ikea posts fall in annual sales after lowering prices

Ikea posts fall in annual sales after lowering prices

Ikea had increased prices after inflation surged in 2021
Ikea had increased prices after inflation surged in 2021. Photo: Brandon Bell / GETTY IMAGES NORTH AMERICA/Getty Images via AFP/File
Source: AFP

Don't miss out! Get your daily dose of sports news straight to your phone. Join YEN's Sports News channel on WhatsApp now!

Ikea reported Thursday that its annual sales fell in value after the world's biggest furniture retailer lowered prices to revive traffic at its online and brick-and-mortar stores.

The Swedish company said sales amounted to 45.1 billion euros ($49.3 billion) in its fiscal year ending in August, down 5.3 percent from the previous 12-month period.

"This is mainly due to lower prices. The result was achieved despite a struggling global economy and shrinking home furnishing market," Inter Ikea, the group's main holding, said in a statement.

"However, with Ikea continuously investing in lower prices its market share has increased," the statement added.

Ikea announced rare price increases -- averaging nine percent -- in December 2021 as inflation climbed worldwide due to supply chain bottlenecks following the Covid pandemic.

Read also

7-Eleven owner restructures to fight takeover

'Right thing to do'

The group began to lower prices in September 2023 to improve sales volume at its stores.

Ikea said physical store visits increased by 4.5 percent following the price drops while online traffic jumped by 21 percent.

"Volumes are up with increasing consumer demands," it added.

In a separate statement, Ingka Group, which owns most Ikea franchises and accounts for more than 90 percent of total revenue, said it invested 2.1 billion euros to lower prices across thousands of products.

"It was just the right thing to do," Tolga Oncu, retail manager at Ingka Group, told AFP.

The 2.1 billion euros took the group "closer to our vision to create a better everyday life for the many people in times where the purchase power was really struck," he said.

Read also

Uniqlo owner reports record annual earnings

Oncu said the company knew that the price drops would have an "impact" on sales.

In addition to more visits to stores, "we also see increases in quantities of pieces sold, which is, of course, very, very important to a growth- and volume-driven company," he added.

"So from an Ikea eye point of view, we look at 24 as a good year," Oncu said, adding that the group was optimistic about 2025.

New feature: Сheck out news that is picked for YOU ➡️ click on “Recommended for you” and enjoy!

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.