IKEA annual sales slumped 5% as consumers pull back on furniture purchases amid a weak housing market, according to an earnings report released Thursday.
The Swedish home decor retailer has slashed prices and committed itself to making more price cuts in the future in an effort to win back cash-strapped customers.
Ingka Group, which owns most IKEA stores globally, reported 39.6 billion euros, or $43.3 billion, in sales for its fiscal year 2024 which ended Aug. 31.
“In all our markets we experienced a slowdown of the economy and a slowdown of the home furnishing industry, almost simultaneously,” Ingka Group CEO Jesper Brodin said. “We never experienced anything like that since 2008, to be honest.”
IKEA started cutting prices after seeing a drop in store visits and sold quantities. The more affordable prices improved store traffic and the amount of products sold, Brodin said.
“We are in times when 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 impacted on people’s wallet and when times are challenging for people, we want to support in the best possible way.”
Ingka Group said it invested around $2.3 billion in price cuts.
Its share of the global home furnishing market stayed mostly unchanged at 5.7%, it said.
The company expects to see a boost in sales next year thanks to lower interest rates in countries around the world.
The Federal Reserve slashed interest rates in the US in September for the first time since 2020.
Analysts previously told The Post that it will likely take about 90 days for consumers to feel relief from those rate cuts in their mortgages.
When those effects take hold, IKEA hopes the rate cuts will push more people to move to new houses — which usually means buying new beds, couches, shelves and bookcases.
IKEA store visits increased 3.3% to 727 million this year, slower than the 7.4% growth seen in fiscal year 2023.
The company opened 41 new stores, down from 60 openings in the previous year.
Its share of sales made online increased to 28%, up from 26% in the year before.
Inter IKEA Group, which owns the IKEA brand and manufactures the products, reported annual sales of $49.3 billion across all franchisees. Ingka Group is its largest franchisee.
Inter IKEA Group annual sales fell 5.3% compared to fiscal year 2023. The company attributed this drop to lower raw material costs, which then cut prices.
With Post wires