Ikea has achieved a notable profit increase in 2024 despite facing a decline in its overall sales.
- The company’s operating profit has risen by 4% compared to the previous year, reaching £1.9 billion.
- Total sales have decreased by 9%, amounting to £21.9 billion, as a result of strategic price cuts.
- Average product prices were reduced by 15% to enhance affordability following previous price hikes.
- Future plans include further price reductions, although specific targets remain undisclosed.
Inter Ikea, the entity that owns the well-regarded Swedish furniture brand, has reported a promising rise in profits for the fiscal year ending 31 August 2024. This increase in profitability comes in the face of a noticeable 9% decline in overall sales, which fell to £21.9 billion. Despite this challenging sales environment, operating profit improved by 4%, reaching £1.9 billion.
A significant factor contributing to this profit growth was Ikea’s strategic decision to implement price reductions across a range of products. The chief financial officer, Henrik Elm, highlighted that prices were lowered by an average of 15%. This move enabled Ikea retailers to reduce their selling prices by about 10% on average, thus making their products more accessible to a broader customer base.
These adjustments were essential following a previous hike in prices in 2021, which was necessitated by substantial increases in raw material costs. By making their products more affordable, Ikea seeks to bolster its market share and appeal to cost-conscious consumers, which is a crucial aspect of their business strategy amidst fluctuating economic conditions.
Looking ahead, Ikea plans to continue this trend of price reductions to maintain consumer interest and competitiveness. However, Henrik Elm has refrained from providing specific figures regarding future price adjustments, indicating a cautious but optimistic approach towards maintaining affordability.
Ikea’s financial manoeuvres highlight a strategy focused on balancing profitability with enhanced market accessibility through structured price reductions.
