// Ikea profits fall by almost a fifth as the retailer warns on further price increases
// The decline in profits came despite a 12% increase in sales in the year to 31 August
Ikea has warned that it cannot rule out further price increases in the new year as profits fall by almost a fifth.
The decline in profits came despite a 12% increase in sales in the year to 31 August, thanks to shoppers returning to stores.
Meanwhile, ecommerce sales accounted for 35% of annual sales, compared with 45% a year earlier when lockdown restrictions led to online shopping.
The Swedish retailer said price increases for shoppers could not be ruled out, but it will attempt to be “competitive and affordable”.
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Total sales rose to £2.2 billion, surpassing pre-pandemic levels for the first time.
However, operating profit dropped to just under £50 million, down from more than £61 million a year earlier due to increasing energy bills, rising prices from suppliers and increased freight costs.
Ikea UK country retail manager, Peter Jelkeby said: “We have to be competitive and affordable and we are working very hard on improving our offer.”
He said shoppers were looking for ways to save money and energy, with people buying insulated curtains, water saving taps and energy saving lightbulbs.
Jelkeby added that Ikea will be expanding its furniture buy-back scheme, which is now operating in all stores and has already resulted in the return of 28,000 items.
The company has tried to keep costs down and trade more sustainably by cutting waste, which is down by 50% on food, and is switching to electric vehicles for deliveries to customers’ homes.
