Ikea has seen profits dive €1 billion over the last year as it uses funds to “finance the business transformation”.
For the year to the end of August, the Swedish furniture retailer’s core retailer arm, now called Ingka Group, reported a profit decline of 40 per cent to €1.47 billion, down from €2.47 billion a year earlier.
Meanwhile revenues continued to increase, edging up two per cent to €37 billion over the same period.
Undeterred by the stark drop in profits, chief financial officer Juvencio Maeztu said this was all “part of the plan”.
“We decided a year ago that we did not want customers to pay for the transformation,” Maeztu said.
“It’s a conscious decision to lower the profit to finance the business transformation (and) we expect to keep the same level of profit for the next three years.”
Profits are due to rebound in 2022 but within that time Ingka is understood to be planning a record number of job cuts as it strives to keep costs as low as possible.
“We are in a four-year process to transform the company,” Maeztu said.
“We have been operating for 75 years with the same business model. From 2018-22, we have a big programme to change the company, to be ready for the next 75 years. We are investing like never before.”