FY22 was a very challenging year. Although the impact by measures to stop the spread of Covid-19 reduced, the direct and indirect consequences of the war in Ukraine and specifically the negative effects of the energy crisis and inflation did affect the franchisees’ IKEA retail sales.
Total IKEA retail sales for FY22 reached EUR 44.6 billion (EUR 41.9 billion in FY21). This includes sales of IKEA products, food and services to customers. Compared to FY21, retail sales grew by 6.5% (+3.5% when adjusted for currency effects) but where growth was seen in sales value, sales in volumes and number of products have decreased. Inter IKEA Group total FY22 revenues reached 27.6 billion including wholesale sales to IKEA retailers, franchise fees and retail sales from the IKEA Delft store.
“With the strong connection to retail sales development, the volumes sold to the IKEA retailers also decreased, specifically in the second half of the financial year. Although there are still challenges to maintain the supply of furniture to the retailers, the availability of products for IKEA customers has improved,” says Martin van Dam, CFO of Inter IKEA Group.
With raw material and commodity prices, as well as costs related to transportation and logistics, continuing to rise and accelerating in spring, it was no longer possible to fully absorb these costs. Consequently, price increases were required resulting in higher revenues, partly offsetting these higher costs. This resulted in a lower gross margin compared to FY22.
“In order to keep the prices of the IKEA products as low and stable as possible, Inter IKEA group has over the last couple of years absorbed increasing purchases and transport cost. This is the main cause of the lower gross margin and profitability”, says Martin van Dam.
Operating expenses went-up as we invested in capability for the strategic and digital changes needed to improve the IKEA value chain and the (online) IKEA sales experience. In addition, there were additional costs for managing the complexities and inefficiencies of our supply chain, and one-off costs connected to stopping supply operations in Russia and the continued scale down of Inter IKEA Group presence.
Following the above net profit for Inter IKEA Group amounted to EUR 0.7 billion, down from EUR 1.4 billion last year.
“Inter IKEA Group continues to focus on growth and securing price levels to franchisees that offer value to the many IKEA customers. This remains an important element in our approach to conquer these challenging economic times”, says Martin van Dam.
1The Inter IKEA Group financial year runs from 1 September to 31 August
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 Inter IKEA Group
Inter IKEA Group includes Inter IKEA Systems B.V., IKEA of Sweden AB, IKEA Supply AG, IKEA Industry AB and related businesses. Inter IKEA Holding B.V. is the holding company for the Inter IKEA Group.
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 range, supply products and deliver communication solutions. Today, 12 different groups of companies own and operate IKEA sales channels under franchise agreements with Inter IKEA Systems B.V.
For more information contact: Media.Franchisor@Inter.IKEA.com +31-62-124-0618
Inter IKEA Group Financial Summary FY22
Inter IKEA Group Tax Report FY22
Inter IKEA Holding BV Annual Report FY22