IKEA, the popular budget furniture retailer, has achieved its highest annual sales ever, despite a range of challenges. These challenges include price hikes, disruptions in the supply chain, weakening consumer confidence, and the company’s exit from the Russian market. Inter IKEA, the franchiser for the global home furnishing brand, reported a 6.5% growth in sales at all IKEA stores and online over the course of 12 months, amounting to 44.6 billion euros ($43.3 billion). In local currencies, this represents a growth of 3.5%.

The company attributes its sales growth to both price increases and the successful resolution of some of the pandemic-related challenges it faced. However, it also acknowledges that inflation and supply chain issues have had a negative impact on sales quantities. Jon Abrahamsson, CEO of Inter IKEA, emphasizes that the sales growth was primarily driven by higher prices, as retailers’ sales volumes did not see a significant increase throughout the year. It’s worth noting that Inter IKEA absorbed some of the input cost increases instead of passing them on to retailers.

Ingka Group, the majority owner of IKEA stores, also reported an increase in sales. The group experienced a 5.6% growth, or 2.2% in local currencies, amounting to 39.5 billion euros. Ingka Group states that sales grew in most markets, and overall product availability improved.

Jesper Brodin, CEO of Ingka, previously announced price hikes averaging 12% for the fiscal year due to rising material costs and supply chain disruptions. However, he also mentioned that the company was able to reduce prices during the summer months as stocks began to replenish with the recovery of supply chains. Brodin adds that sales growth improved towards the end of the year, reaching double-digit figures. Despite challenges such as the energy crisis, inflation, and the war in Ukraine impacting consumer confidence, Brodin emphasizes that demand for IKEA products remains strong in the new fiscal year. He acknowledges the upcoming challenges in the winter season but expresses confidence in the company’s ability to navigate them successfully.

Looking ahead, Brodin reveals that product prices will continue to be adjusted based on market availability. Ingka is also planning to launch a “store-in-store” concept that aims to provide IKEA products geared towards helping households reduce water and energy consumption. This concept store will offer items such as LED lighting, solar panels, and battery chargers, along with advice on reducing energy bills.

Regarding the company’s operations in Russia, IKEA temporarily halted its activities in the country in March and put its factories up for sale in June. As of now, the IKEA stores in Russia remain closed, but Ingka’s shopping malls are still open. Brodin confirms that a decision about whether to sell the IKEA stores in Russia has not been made.

Despite the numerous challenges faced, IKEA’s record sales exemplify the resilience and adaptability of the company in an intricate and uncertain market landscape. The company’s ability to maintain strong demand and achieve growth in sales towards the end of the year indicates a positive trajectory going forward.

Useful links:
1. IKEA Official Website
2. Wall Street Journal – IKEA Record Sales Article