Despite a decline in sales, Inter Ikea managed to boost its profits in 2024.
- Operating profit for Inter Ikea rose by 4% to £1.9bn, even as sales plummeted by 9%.
- Price reductions averaged 15% across the year, aiding retailers in lowering prices by 10%.
- The strategy aligns with efforts to enhance brand affordability post-2021 price hikes due to raw material costs.
- Inter Ikea plans further price cuts, although specific figures are undisclosed.
In a notable financial performance, Inter Ikea, the entity behind the well-known Swedish furniture brand, achieved a rise in profits for the year 2024, even in the face of diminishing sales. This profitability milestone comes as the company strategically reduced its prices, aiming to bolster the brand’s appeal and affordability.
The operating profit for the group, which provides supplies to its franchise stores, saw an increase of 4%, reaching £1.9 billion. This growth occurred despite a substantial 9% fall in overall sales, which totalled £21.9 billion. The information was corroborated by a report from Reuters, indicating a successful execution of cost management and strategic positioning.
Henrik Elm, the Chief Financial Officer of Inter Ikea, stated that the organisation had reduced its product prices by an average of 15% over the year. This pricing strategy facilitated an average 10% decrease in prices at Ikea retail locations. Elm also mentioned that the company intends to continue this trend of price reduction, although he refrained from specifying precise targets.
The decision to cut prices forms part of a broader strategy to recover from the price hikes implemented in 2021, which were necessitated by a significant increase in raw material costs. By decreasing prices, Inter Ikea seeks to reinforce its market position and offer consumers more accessible price points for its products.
Inter Ikea’s proactive pricing strategy has successfully increased profitability despite challenging sales figures.
