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Inter IKEA Group reports solid financial performance in challenging times


Today Inter IKEA Group reports solid financial results for financial year 2020 (FY20) while supporting IKEA suppliers and franchisees during the pandemic.  FY20 has been a challenging year. IKEA retail sales were strong until February, then the pandemic hit. During the spring, about 75% of IKEA stores closed for seven weeks on average. But online sales grew significantly during the lockdowns, and retail sales recovered quickly when stores re-opened. This led to total IKEA retail sales of EUR 39.6 billion in FY20 (4% less than FY19).  “The pandemic created several challenges this year. First we stopped production and altered distribution channels, then we had to ramp up to meet new demand – even as some IKEA suppliers faced their own lockdowns. Together these disruptions created operational challenges,” says Inter IKEA Group CFO Martin van Dam. 

Inter IKEA Group supported the franchise system and value chain to remain strong. For example, IKEA suppliers were provided financing solutions to minimise the pandemic’s impact on their businesses. And IKEA franchisees were given the option to delay payments for IKEA products until sales recovered. 

Although less than last year, IKEA retail sales led to solid financial results for Inter IKEA Group. Total Inter IKEA Group FY20 revenues landed at EUR 23.6 billion. That’s also less than last year, but gross margins improved as purchase prices were lower than planned. In addition, the Group reduced operating expenses through recruitment stops and lower anticipated consulting spend. Despite this reduced spending, the Group continued to invest in key development initiatives to support future growth. 

For example, the Group supported franchisees to pilot and implement new digital formats, including launching IKEA e-commerce in China for the first time. The Inter IKEA Group factory in Hultsfred, Sweden, invested EUR 12 million to support a circular business model by using recycled wood to produce wood-based boards for IKEA furniture. And the Group continued to work with social entrepreneurs to develop products that create a stable income for people in vulnerable communities. 

Inter IKEA Group continued to hold a strong financial position as it has a special position to protect the long-term success of the IKEA franchise system. Therefore the Group did not make use of pandemic-related government support and will pay dividends to its investment shareholder as usual. Net profit amounted to EUR 1.7 billion in FY20. 

Despite unpredictable times, Inter IKEA Group expects further growth in FY21. “IKEA stores remain popular even as e-commerce sales continue to grow. As people spend more time at home, we expect continued demand for affordable home furnishing solutions in the year ahead,” says Martin. 

 

About IKEA
IKEA offers well-designed, functional and affordable, high-quality home furnishing, produced with care for people and the environment. There are several companies with different owners, working under the IKEA Brand, all sharing the same vision: to create a better everyday life for the many people. IKEA was founded in Sweden in 1943.

About the IKEA franchise system
The IKEA retail business is operated through a franchise system with franchisees that are authorised to market and sell the IKEA product range within specified geographical territories. Inter IKEA Systems B.V. is the owner of the IKEA Concept and worldwide IKEA franchisor, who also assigns different IKEA companies to develop the product range, supply products and deliver communication solutions. Today, 12 different groups of companies have the right to own and operate IKEA sales channels under franchise agreements with Inter IKEA Systems B.V.

About Inter IKEA Group
Inter IKEA Group includes Inter IKEA Systems B.V., IKEA of Sweden AB, IKEA Supply AG and IKEA Industry AB related businesses. Inter IKEA Holding B.V. is the holding company for the Inter IKEA Group.

For facts & figures from across the IKEA franchise system visit: about.ikea.com/en/about-us/year-in-review

Downloads
Inter IKEA Group Financial Summary FY20
Inter IKEA Holding BV Annual Report FY20
Inter IKEA Holding BV List of subsidiaries FY20

Assets

Contacts
  • IKEA Franchising
    If you want to know more about the IKEA Brand, our people and sustainability agenda, our culture and values, the IKEA expansion and franchise system, please contact us here:
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