Ikea’s annual sales fell 5% as consumers pulled back on furniture purchases amid a weak housing market. earnings report Released on Thursday.
The Swedish home decor retailer has cut prices and has committed to more price cuts in the future in an effort to lure back cash-strapped customers.
Ingka Group, which owns the majority of IKEA stores globally, reported 39.6 billion euros, or $43.3 billion, in sales for its fiscal year 2024 that ended Aug. 31.
“In all our markets we have experienced almost simultaneously a recession in the economy and a recession in the home furnishing industry,” said Jesper Brodin, CEO of Ingka Group. “Honestly, we haven’t experienced anything like this since 2008.”
Ikea began cutting prices after seeing a decline in store visits and sales volumes. The more affordable prices improved store traffic and the volume of products sold, Brodin said.
“We are at a time when the dreams and needs for a better life at home are greater than ever,” Brodin said in a statement. “At the same time, inflation and interest rates have taken a toll on people’s wallets and when times are challenging for people, we want to support in the best possible way.”
Ingka Group said it has invested about $2.3 billion to cut prices.
Its share of the global home furnishing market remained mostly unchanged at 5.7%.
The company expects sales to increase next year due to low interest rates in countries around the world.
Federal Reserve cuts interest rates In America for the first time since 2020 in September.
Analysts previously told The Post It will take about 90 days for consumers to feel relief from the reduction in their mortgage rates.
When these effects begin to take hold, Ikea hopes the rate cuts will inspire more people to move into new homes – which usually means buying new beds, sofas, wardrobes and bookcases.
IKEA store visits rose 3.3% to 727 million this year, slower than the 7.4% growth seen in fiscal 2023.
The company opened 41 new stores, down from 60 last year.
Its share in online sales increased to 28%, from 26% a year ago.
Inter Ikea Group, which owns the Ikea brand and manufactures the products, reported annual sales of $49.3 billion across all franchises. Ingka Group is its biggest franchisee.
Inter-Ikea Group’s annual sales declined by 5.3% compared to fiscal year 2023. The company attributed this decline to lower raw material costs, following which the prices were cut.
with post wires
