By Helen Reid
LONDON (Reuters) – The world’s greatest retailer of IKEA furnishings on Wednesday reported an enormous drop in annual web revenue after slicing costs in an try and coax extra cost-conscious buyers into its huge blue shops.
Ingka Group, the biggest IKEA franchisee, reported web revenue of 800 million euros ($841.28 million) for the monetary yr ending Aug. 31, down from 1.5 billion euros the yr earlier than. Its working revenue margin was 3% on an working revenue of 1.3 billion euros, down from 2 billion euros in 2023.
The retailer, which runs shops in 31 nations and accounts for 90% of worldwide IKEA gross sales, mentioned it prioritised affordability over revenue, investing 2.1 billion euros in decreasing costs on gadgets from bookcases to bedding.
Revenues for Ingka Group had been down 5.5% from final yr, at 41.8 billion euros, together with IKEA retail gross sales of 39.6 billion euros, however the firm mentioned decrease costs helped to drive retailer footfall up 3.3%, with visits to its web site up 28%.
“Sales are developing well since we started this fiscal year, and this is confirmation that… even if we sell at a lower price average, we sell more quantities and we get access to many more people,” Juvencio Maeztu, deputy CEO and CFO of Ingka Group, advised Reuters in an interview.
The portions of things like $229 mattresses and $149.99 wardrobes bought by IKEA has elevated thanks to cost reductions, Maeztu added. Earlier value hikes had dented the quantity of merchandise bought.
“We have reduced significantly, and now we plan to keep [prices] at this level,” Maeztu mentioned.
Germany was the largest marketplace for IKEA, accounting for 15.5% of gross sales, adopted by the USA, France, the UK, and Italy.
Earlier this month, Inter IKEA, the proprietor of the world’s greatest furnishings model, reported larger earnings for 2024 due to decrease curiosity funds, regardless of a pointy fall in revenues after it lower costs throughout its product ranges.
Inter IKEA makes the group’s merchandise and owns the model, and franchises it out to Ingka Group and others.
Privately-held Ingka Group, which reinvests 85% of revenue into the enterprise and pays 15% to its proprietor, the Ingka Basis, mentioned its monetary independence permits it to speculate for the long term.
Ingka, which additionally runs procuring centres world wide, bought its final asset in Russia earlier this month, having bought its procuring centres within the nation in September final yr.
($1 = 0.9509 euros)
