Ikea hit by 'very low' consumer confidence

STOCKHOLM

Swedish furniture giant Ikea reported Thursday a one-percent drop in sales for its 2024-2025 fiscal year, due to its price reductions and consumers tightening purse strings.

Sales for the full year, which closed at the end of August, fell to 44.6 billion euros ($52 billion) but volumes and the number of customers rose by three percent, Ikea's holding company Inter Ikea said.

"We have prioritised lower prices, volume and customer growth the last two years," Inter Ikea chief executive Jon Abrahamsson Ring told AFP.

The company has reduced its prices by 10 percent over the past two years, in a bid to revive traffic at its online and brick-and-mortar stores.

At the same time, "for several years in a row now, consumer confidence has been decreasing", Abrahamsson Ring said.

"The past year it has flattened out, but it's still on a very low level compared to many decades back," he added.

As a result, consumers are holding off before deciding to renovate their homes or buy new furniture.

"And that we see not just in one region. We see it across all 63 markets."

Inter Ikea plans to continue to lower its prices "but it will be more on the normalised level of somewhere between one to three percent every year", Abrahamsson Ring said.

He said the current fiscal year was "starting well", noting that the group was continuing to "grow in volume ... in customers and in visitation, (and) we're also growing in money".

Rule-based trade 'always the best'

Abrahamsson Ring also called for "predictable and consistent" tariff policies, after U.S. President Donald Trump's fresh tariffs on imported wood, furniture and kitchen cabinets took effect this week.

Much of Ikea's furnishings sold in the United States are imported from Europe, subjecting them to a 15-percent tariff agreed in a trade deal reached in July between the United States and the European Union.

The company is therefore not affected by the new 25 percent rate imposed on certain upholstered furniture and kitchen cabinets.

"We are following this very closely but we believe that the agreement that the European Union and the U.S. has made on the 15 percent, at least that gives us predictability, which is the most important thing," he said.

"We believe that open rule-based trade is always the best... We think that's of course good for Ikea, but it's also good for the world," Abrahamsson Ring said.