IKEA Profits Fall as Furniture Giant Cuts Prices to Boost Growth
IKEA reported lower annual profits and a 1.8% sales drop to 43.8 billion euros amid price cuts, aiming to spur growth through affordability and urban stores.
IKEA reported a decline in profits and sales for the past fiscal year as the world's largest furniture retailer cut prices to attract budget-conscious shoppers amid lingering inflation.
For the fiscal year ending in August, IKEA posted a 1.8% drop in sales to 43.8 billion euros ($48.9 billion), while operating profit fell 12% to 1.5 billion euros. Speaking to AFP, Inter IKEA Holding CEO Jakob Jonckowski expressed confidence in the new strategy. "I think we have found the formula that will bring IKEA back to the vision of making it affordable for many people around the world," Jonckowski said.
In September, the group announced price cuts of up to 28% on approximately 1,500 products in Europe, marking the second major price reduction in two years. Chief Financial Officer Henrik Elm noted that the company can sustain these investments by optimizing its asset utilization.
To further boost growth, IKEA plans to open more inner-city stores and increase customer footfall, which reached 913 million visits over the past year. Executives noted that modern consumers prefer visiting stores every four to six weeks for everyday items, compared to two to three times a year previously.
