1 week Ago By Varun Godinho
Inter Ikea, the owner of the world’s biggest furniture brand which has 10 stores and 3 Plan and Order points in Australia, has reported higher profits for 2024 although its sales are falling sharply. The decline in revenue comes as it cut prices across a range of products in order to drive sales. The price reductions were put in place after it had previously hiked prices significantly in 2021-2022 when global supply chain disruptions as a result of the pandemic had raised raw material costs.
Inter IKEA which supplies the stores to which it franchises the IKEA brand lowered its prices by an average of 15 per cent over the year, said chief financial officer Henrik Elm. That move allowed Ikea retailers to cut prices for customers by an average of 10 per cent. Price cuts resulted in a revenue decline of 8.
9 per cent to 26.5 billion euros (A$42.96 billion) for its financial year ending August 31.
But Inter Ikea noted that lower prices were encouraging customers to buy more, helping to boost operating profit to 2.3 billion euros (A$3.73 billion), up from 2.
2 billion euros (A$3.57 billion) in 2023. “You could say that, in rough terms, we are back to where we were pre-COVID in prices, if you would adjust it for inflation,” said Elm, adding that the company aims to bring prices down further this year, reported Reuters.
However, net profit jumped to 2.2 billion euros (A$3.57 billion), up from 1.
6 billion euros 9A$2.59 billion) last year. Ikea Australia has reduced prices across several products too and has invested tens of millions to do so.
“Over the past year, we have already invested $125 million to lower the price of over 3000 items and keep them down for Australian customers, outside of any sale or discount periods, so that high-quality, functional and beautiful products are within everyone’s reach, year-round at IKEA,” said Aleksandr Moshkalev, Ikea Australia Country Selling Manager. Ikea’s four-day Black Friday weekend sale in Australia begins on Friday, November 29 with the retailer promising up to 40 per cent cuts across a range of home furnishings and accessories..
