IKEA said its annual sales fell 5% as consumers cut back on furniture purchases due to the housing market downturn. earnings report It was released on Thursday.
A Swedish home decor retailer has slashed prices and promised further reductions in the future in a bid to win back cash-strapped customers.
Inka Group, which owns most of IKEA's stores around the world, reported sales of 39.6 billion euros ($43.3 billion) for the 2024 fiscal year ending Aug. 31.
“We experienced an economic slowdown and a slowdown in the home furnishings industry almost simultaneously in all of our markets,” said Inca Group CEO Jesper Brodin. “To be honest, I’ve never experienced anything like that since 2008.”
IKEA has begun lowering prices due to declining store visits and sales volume. Brodin said the more affordable prices have led to more foot traffic in the store and more product sales.
“We are now in a time when the dream and need for a better home life is greater than ever,” Brodin said in a statement. “At the same time, inflation and interest rates are having an impact on people's wallets, and during difficult times for people, we want to help in the best way possible.”
Ingka Group said it invested about $2.3 billion in price reductions.
The company's share of the global home furniture market remained unchanged at 5.7%.
The company expects sales to increase next year thanks to lower interest rates around the world.
In September, the Federal Reserve cut U.S. interest rates for the first time since 2020.
Analysts previously told the Post that it would likely take about 90 days for consumers to feel the relief of lower mortgage rates.
If this effect takes hold, Ikea hopes that lower interest rates will encourage more people to move into new homes. This usually means buying a new bed, sofa, shelves, or bookcase.
Visits to IKEA stores rose 3.3% this year to 727 million, but slower than the 7.4% growth in 2023.
The company opened 41 new stores, down from 60 stores the previous year.
The company's share of online sales increased to 28% from 26% a year ago.
Inter IKEA Group, which owns the IKEA brand and manufactures its products, reported annual sales of $49.3 billion across all franchisees. Ingka Group is the largest franchisee.
InterIKEA Group's annual sales decreased by 5.3% compared to FY2023. The company attributes this decline to lower raw material costs and associated price reductions.
with post wire
