Ikea has reported a third consecutive year of falling sales, prompting a €1.2bn investment in price cuts to win back shoppers.
The company’s global sales dropped two per cent to €43.8bn in the year to the end of August, down from €44.6bn the previous year, as weaker trading in China and the Middle East offset growth across Europe and Latin America.
Inter Ikea, which owns the brand and supplies products to its franchisees, saw its revenues fall two per cent to €25.9bn, while net profit dropped seven per cent to €1.4bn.
Chief executive Jakub Jankowski warned that subdued consumer confidence and geopolitical uncertainty could continue to weigh on sales and profitability in the coming year.
“It was a challenging year for us,” Jankowski told the FT. “It is possible that this year will be challenging also. The market is not easy.”
Ikea is stepping up efforts to attract cash-strapped consumers, having announced a €1.2bn investment in September to reduce prices across more than 1,000 products in Europe.
The cuts, which reach up to 25 per cent on selected items, include popular ranges such as its Billy bookcases and Kallax storage units across more than 20 European countries.
Jankowski said the pricing strategy was part of a longer-term effort to strengthen Ikea’s affordability proposition rather than a short-term promotional push.
It previously slashed prices in 2023 following pandemic-related increases in shipping and production costs, although the move initially weighed on revenues and profitability.
Alongside its pricing investment, Ikea is accelerating its shift towards smaller city-centre stores to reach shoppers who do not own cars or live near its traditional out-of-town warehouses.
It opened around 90 smaller stores during its last financial year and is targeting a 50 per cent increase in openings over 2026 and 2027.
Jankowski said the changing shopping habits of urban customers would also require Ikea to refresh its product ranges more frequently and introduce more seasonally relevant products.
The strategy follows Ikea’s push into high street retail, including the opening of its Oxford Street flagship in London last year.
However, Ikea to face rising freight and energy costs, alongside cautious household spending on furniture and home improvements.
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