STOCKHOLM - Budget furniture giant Ikea reported record high annual sales on Thursday as price hikes and easing effects from the pandemic made up for supply shortages, weakening consumer confidence and its exit from Russia.
Inter Ikea, franchiser for the world's biggest home furnishing brand, said sales at all Ikea stores and online grew 6.5 per cent in the 12 months to August, or 3.5 per cent measured in local currencies, to €44.6 billion (S$62 billion).
"Inflation and supply chain issues impacted FY2022 sales, and led to rising costs and higher prices. That means sales have grown in money, but sales quantities have not kept up," Inter Ikea said in a statement.
"In addition, supply chain shortages made it difficult to keep Ikea shelves full," it said.
Inter Ikea chief executive Jon Abrahamsson Ring said in an interview that retailers' sales volumes had not increased during the year. He added that Inter Ikea had not passed on all input cost increases to the retailers, but had assumed some itself.
Ingka Group, which owns the bulk of Ikea stores including those in main market Europe and the closed ones in Russia, said separately that its sales rose 5.6 per cent, or 2.2 per cent in local currencies, to €39.5 billion.
The group said in a statement that sales grew in most of its markets and the availability of products improved overall.
Ingka CEO Jesper Brodin, who in March said price hikes would average 12 per cent in the fiscal year amid soaring raw material costs and supply chain disruptions, said on Thursday that Ingka had been able to start lowering prices again this summer as stocks started filling up thanks to recovering supply chains.
Mr Brodin said sales growth improved towards the end of the year to double-digit figures, and that so far in the new fiscal year, demand remained "incredibly strong" despite an overall drop in consumer confidence due to the energy crisis, soaring cost inflation and the war in Ukraine.
"We currently do not see any big slowdown tendencies," he said, adding that visitor numbers to stores kept increasing.
"But we have deep respect for the year we are in... and we are prepared for a tough winter for people everywhere."
He said product prices would continue to be adjusted depending on availability in specific markets.
Ingka was also in the process of opening a "store-in-store" that offers Ikea's products to help households reduce water and energy consumption - such as LED lighting, solar panels and battery chargers, alongside advice on how to reduce energy bills.
Ikea in March paused operations in Russia, which last year accounted for more than 4 per cent of Ingka's sales.
Inter Ikea in June put its factories in the country up for sale and Ikea stores remain closed, but Ingka's shopping malls remain open. Mr Brodin said on Thursday that Ingka had not yet decided whether to sell the its Ikea stores. REUTERS