Ikea's earnings decrease following price reductions
Ikea, the globe's leading furniture seller, reported a 4% decrease in sales to €45.1 billion ($49.3 billion) during their 2024 financial year, which spanned from September 1, 2023, to August 31, 2024. They disclosed this information publicly on Thursday.
Ikea defended their decision to focus on "slashing prices" as part of a €2 billion worldwide discount scheme across all their stores, claiming no regrets about the move.
In a press statement, Jesper Brodin, the CEO of Ingka Group, Ikea's largest franchisee, stated, "Inflation and interest rates have affected people's wallets, and during hard times, we want to provide the best possible support."
He further added, "Investing in reducing our prices is our long-term commitment, and this year, the resilience of the Ikea vision, our unity, and our entrepreneurial spirit were put to the test."
Similar to its competitors, Ikea incrementally increased prices following the Covid-19 outbreak's peak in 2020 due to rising material and transportation costs. Their substantial discount program in the previous year resulted in reduced prices for popular items such as the Billy bookcase.
The lower prices led to an uptick in store and online visits, with a 21% surge recorded. Ikea served up an estimated 1.2 billion meatballs for the entire year, and a company spokesperson confirmed that they also saw an increase in sales from their cafes.
Ikea anticipates more discounts this year, although they won't be as substantial.
Jesper Brodin, acknowledging the impact of inflation and interest rates on consumers' budgets, stated that Ikea's focus on price reductions is a long-term commitment, aimed at providing support during difficult times. Despite other businesses incrementally increasing prices after the Covid-19 outbreak, Ikea's discount program led to an increase in their sales, both in-store and online.
