Key retailer IKEA profits soar despite ‘unprecedented challenges’

FILE PHOTO: People line up at Ikea as it reopens, following the outbreak of coronavirus disease (COVID-19), in Gateshead
FILE PHOTO: People line up at Ikea as it reopens, following the outbreak of the coronavirus disease (COVID-19), in Gateshead, Britain, June 1, 2020. REUTERS/Lee Smith

November 30, 2021

By Anna Ringstrom

On Tuesday (Reuters) – Ingka Group, the owner of most of the IKEA stores worldwide, reported a jump in annual profits fueled by record demand for home furnishings as people stay home more. than the pandemic.

Despite more temporary store closures due to pandemic-related restrictions compared with the previous year and product shortages due to the global supply chain crisis, operating profit for the 12 months through August remained intact. up 31% at 1.9 billion euros. Sales were up 6%, above pre-pandemic levels, with online sales skyrocketing to 30% of total sales, compared with 18% the year before.

Compared to the 2019 financial year before the pandemic, profits are still down 8% due to high levels of investment. Capital spending has increased by 52% on the year to 3.2 billion euros, as Ingka accelerates investments in digitalisation, new inner-city store formats, existing stores and distribution network and delivery.

Chief financial officer Juvencio Maeztu told Reuters he expected sales to also increase in the current financial year and profits to be at least as high as in the past year. Investment levels are likely to remain as high as they were last year, he said.

“Our journey to create a better IKEA is moving forward in a world facing unprecedented challenges. COVID-19 will continue to impact our business and the communities of which we are a member,” the company said in a statement.

“The global transportation and supply crisis will require a resilient and resilient response. Efforts across the entire value chain will continue to mitigate challenges in terms of product availability, inflation, raw material prices, and transportation that are expected to continue into FY22.”

The affordable furniture brand IKEA operates through a franchise system, with Ingka being the main franchisee for brand owner Inter IKEA with 392 stores including city stores and 73 smaller stores. .

Inter IKEA, in charge of design and supply, has seen significantly higher material and shipping costs over the past year, but has warned that it will raise prices for retailers this year due to higher costs. related to continued high supply.

Ingka’s Maeztu said in the interview that he cannot rule out the possibility that Ingka will also raise prices this year.

(Reporting by Anna Ringstrom; editing by Richard Pullin) Key retailer IKEA profits soar despite ‘unprecedented challenges’

Bobby Allyn

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