IKEA reveal a 36% drop in profit

Pre-tax profits for main operations for IKEA are down 36% to £1.8bn, the company have revealed. Despite this, retail sales rose 4.7% and sales rose 2%, as the company opened 12 new stores this year, including its first in India.

IKEA employs 160,000 people but announced last week that they were cutting 7,500 office jobs worldwide. This will include 350 in the UK over the next few years, as the Swedish interior group focus more on the online market, as well as opening smaller stores in city centres.

Despite profits dropping by over a third though, Juvencio Maeztu, deputy chief executive of IKEA franchise Ingka claims that IKEA is at the start of a dramatic transformation. “During the year we have increased our efforts and investments to start to transform our business,” he said. “While this has had an impact on our results, it is a conscious decision for us to start a three-year period to transform our business and be better equipped for the next 75 years.”

This year, IKEA invested €2.8bn in new distribution centres, wind farms and forests in Europe and the US as part of its sustainability efforts and acquired freelance labour firm TaskRabbit, which aims to link tradespeople with consumers via its app. These investments point to IKEA’s growing online influence; while the distribution centres are primarily for online orders, the purchase of TaskRabbit signals IKEA heading into offering services as well as products, following the likes of John Lewis.