IKEA reports record sales as price hikes offset weakening consumer
confidence
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[October 13, 2022] By
Anna Ringstrom
STOCKHOLM (Reuters) -Budget furniture giant
IKEA reported record high annual sales on Thursday as price hikes and
easing effects from the pandemic made up for supply shortages, weakening
consumer confidence and its exit from Russia.
Inter IKEA, franchiser for the world's biggest home furnishing brand,
said sales at all IKEA stores and online grew 6.5% in the 12 months
through August, or 3.5% measured in local currencies, to 44.6 billion
euros ($43.3 billion).
"Inflation and supply chain issues impacted FY22 sales, and led to
rising costs and higher prices. That means sales have grown in money,
but sales quantities have not kept up," Inter IKEA said in a statement.
"In addition, supply chain shortages made it difficult to keep IKEA
shelves full," it said.
Inter IKEA CEO Jon Abrahamsson said in an interview retailers' sales
volumes had not increased during the year. He added that Inter IKEA had
not passed on all input cost increases to the retailers, but had assumed
some itself.
Ingka Group, which owns the bulk of stores including those in main
market Europe, and the closed ones in Russia, said separately its sales
rose 5.6%, or 2.2% in local currencies, to 39.5 billion euros.
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The group said in a statement sales grew in most of its markets and
availability of products improved overall.
STRONG DEMAND
Ingka CEO Jesper Brodin, who in March said price hikes would average 12%
in the fiscal year amid soaring raw material costs and supply chain
disruptions, said on Thursday Ingka had been able to start lowering
prices again this summer as stocks started filling up thanks to
recovering supply chains.
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![](../images/101322PIX/busine5.jpg)
People visit an inner-city IKEA store on
its opening day in Stockholm, Sweden, June 30, 2022. REUTERS/Anna
Ringstrom
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Brodin said sales growth improved too towards the end of the year,
to double-digit figures, and that so far in the new fiscal year,
demand remained "incredibly strong" despite an overall drop in
consumer confidence due to the energy crisis, soaring cost inflation
and the war in Ukraine.
"We currently don't see any big slowdown tendencies," he said,
adding that visitor numbers to stores kept increasing.
"But we have deep respect for the year we are in ...and we are
prepared for a tough winter for people everywhere."
He said product prices would continue to be adjusted depending on
availability in specific markets.
Ingka was also in the process of opening a "store-in-store" that
offers IKEA's products to help households reduce water and energy
consumption - such as led lighting, solar panels and battery
chargers, alongside advice on how to reduce energy bills.
IKEA in March paused operations in Russia, which last year accounted
for more than 4% of Ingka's sales.
Inter IKEA in June put its factories in the country up for sale, and
IKEA stores remain closed, but Ingka's shopping malls remain open.
Brodin said on Thursday Ingka had not yet decided whether to sell
the IKEA stores.
($1 = 1.0309 euros)
(Reporting by Anna Ringstrom; Editing by Emelia Sithole-Matarise)
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