Swedish furniture giant Ikea posted Thursday a six percent rise in full-year sales in what it described as a “challenging” year due to inflation and scaling back in Russia.
The 2022 fiscal year “was a challenging year for the world, of course with all the things going on around us with pandemics but also very steep increasing inflation,” Dutch holding company Inter Ikea’s CEO Jon Abrahamsson Ring told AFP.
Following Russia’s invasion of Ukraine, Ikea closed its 17 shops and halted production in the country, where it was one of the largest Western employers before the war with 15,000 employees.
According to Abrahamsson Ring, a “substantial reduction” of employees had already been carried out.
Jesper Brodin, the CEO of Ingka, a holding company that manages most of Ikea’s stores, told AFP that they “had to say goodbye” to around 10,000 staff out of the 12,000 retail employees in Ikea’s Russian stores.
Before the war, the Russian market represented about four to five percent of the group’s sales.
Total sales from the international furniture behemoth’s over 470 shops came in at 44.6 billion euros ($43.4 billion), for the period September 2021-August 2022, Inter Ikea said in a statement.
However it meanwhile noted that “sales have grown in money, but sales quantities have not kept up. In addition, supply chain shortages made it difficult to keep Ikea shelves full.”
Excluding currency effects, revenue growth was lower at 3.5 percent.
“We had to increase our prices across the whole of Ikea,” Abrahamsson Ring said.
The chief executive explained that the operations had been hurt by supply constraints — especially in Asia — plus increased prices for raw materials and the situation in Russia.
In December 2021, as the current wave of inflation began rearing its head, Ikea announced an average increase of nine percent in its prices.
Raising prices was “against our mission, but we were forced,” Abrahamsson Ring said, adding that while they did not want to raise prices more they “can’t exclude it.”
Founded in 1943 in southern Sweden by the late Ingvar Kamprad, Ikea is not listed on any stock exchange and is therefore not obliged to communicate its financial results.
Following accusations of a lack of financial transparency and tax optimisation schemes, the group started publishing partial results in 2010.
For all the latest business News Click Here
