Ikea, the Swedish furniture giant, has reported a one-percent drop in sales for its 2024-2025 fiscal year, attributed to price reductions and decreased consumer spending. According to Inter Ikea, the company’s holding entity, sales for the full year, which ended in August, totaled 44.6 billion euros ($52 billion). Despite the decline in sales, the company saw a three-percent increase in volumes and customer numbers.
Inter Ikea’s chief executive, Jon Abrahamsson Ring, stated that the company has prioritized lower prices, volume, and customer growth over the past two years. This strategy has led to a 10-percent reduction in prices, aiming to boost traffic at both online and physical stores. However, Abrahamsson Ring noted that consumer confidence has been decreasing for several years, resulting in consumers delaying home renovation and furniture purchases.
The decline in consumer confidence is a widespread trend, observed across all 63 markets where Ikea operates. To address this challenge, Inter Ikea plans to continue lowering prices, albeit at a normalized rate of one to three percent annually. Abrahamsson Ring expressed optimism about the current fiscal year, citing growth in volume, customer numbers, and revenue.
The company is also navigating the impact of US tariffs on imported wood, furniture, and kitchen cabinets. While Ikea’s furnishings sold in the US are subject to a 15-percent tariff, the company is not affected by the new 25-percent rate imposed on certain products. Abrahamsson Ring emphasized the importance of predictable and consistent tariff policies, advocating for open, rule-based trade that benefits both Ikea and the global economy.
As the company moves forward, it will focus on sustaining growth while adapting to shifting consumer trends and trade policies. With its commitment to affordable prices and customer growth, Ikea aims to maintain its position in the global furniture market. The company’s ability to navigate complex trade dynamics and evolving consumer behavior will be crucial in determining its success in the years to come.