Demand slump fails to dent Ikea’s earnings

Swedish furniture maker Ikea took in a record €21.5 billion ($30.1 billion) in earnings so far this year, the company said on Thursday, despite weaker demand.

Demand slump fails to dent Ikea's earnings

Ikea said in a statement that sales for the period from September 1, 2008 to August 31, 2009 were up by 1.4 percent, compared to a 7.0 percent rise 12 months earlier.

Since last September, 15 new stores have opened worldwide, the statement added.

“It has been a challenging year in which we have had to adapt to changed market conditions. We know that many of our customers have less money to spend and our low price concept is therefore more relevant than ever,” said Ikea’s new chief executive Mikael Ohlsson.

In June, his predecessor Anders Dahlvig said Ikea had slashed cut 5,000 jobs to cope with the drop in demand brought about by the global economic crisis.

Ikea is an unlisted, family-owned company and traditionally does not release regular earnings reports.

It employs 123,000 people worldwide and has 267 stores in 25 countries, with another 34 operating under franchise.

Europe represents 80 percent of Ikea’s sales, while North America makes up for 15 percent and the Asia-Australia region five percent.

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Ikea will buy back your used furniture at up to half the price

In the run-up to what would in normal times be the festive season sales rush, Ikea has vowed to buy back used furniture from customers to resell – and pay up to 50 percent of the original price.

Ikea will buy back your used furniture at up to half the price
Got any pieces of Ikea furniture at home? You may be able to get rid of it and get money back. Photo: Fredrik Sandberg/TT

Ikea, the world's largest furniture chain, said Tuesday it would begin buying back used furniture from customers to resell – and pay up to 50 percent of the original price.

The “Buy Back Friday” scheme, timed to coincide with the “Black Friday” pre-Christmas retail frenzy, will run from November 24th and until December 3rd in 27 countries.

“Rather than buy things you don't need this Black Friday, we want to help customers give their furniture a second life instead of making an impulse buy,” said Stefan Vanoverbeke, deputy retail operations manager at Ingka Group, Ikea's parent company.

To address concerns its affordable, flat-pack products encourage overconsumption and waste, the Swedish company had previously said it would start renting and recycling furniture as part of an eco-drive.

Under its buyback scheme, the group said that “anything that can't be resold will be recycled or donated to community projects to help those most affected by the Covid-19 pandemic”.

“Some countries like Australia and Canada for example are currently testing different buyback services, but BuyBack Friday will be the first time that 27 countries do this together,” the statement added.

The Swedish giant employs over 217,000 people and has more than 50 outlets. Its annual turnover is around 40 billion euros ($46 billion).

The group did not specify how it would determine the price paid for second-hand furniture and customers will receive a voucher, not cash, for their products.  

As part of efforts to reduce waste, Ikea has already begun repairing and re-packaging products in every store that have been damaged in transit, as well as allowing customers to return products – including furniture – for resale or donation to charities.