Ikea forecasts ‘flat’ profits for 2010

In a rare comment on Swedish furniture giant Ikea's financials Monday, the firm's CEO reported flat profits for 2009 with more of the same forecast for 2010.

“We do not usually reveal our profits, but I can say that the profit earned over the last accounting year was about at the same level as the previous year,” Ikea CEO Mikael Ohlsson told Swedish daily Dagens Industri (DI).

Ohlsson did not provide a figure, but according to a DI estimate, the Swedish furniture giant’s profit was over 50 billion kronor ($6.9 billion dollars) in 2009.

“It looks like it will be about as good this year,” he told the paper.

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

But in a statement published last September, the company said its sales for the period from September 1st 2008 to August 31st 2009 were up by 1.4 percent to 21.5 billion euros ($30.1 billion).

In June 2009, Mikael Ohlsson’s predecessor Anders Dahlvig said Ikea had slashed 5,000 jobs to cope with the drop in demand brought about by the global economic crisis.

“Strong cost controls are an important factor” Ohlsson told DI when asked to explain the stable profits.

He also said the company’s results in Russia, where it faces corruption allegations, were below expectations.

“It admittedly has not gone as well as we hoped for, but its crystal clear we are continuing in Russia,” he said.

Ikea said last week it had fired two top managers over a bribery affair in the country.

“There is in fact no proof that the bribes have been paid,” Ohlsson said, admitting however the affair would damage the brand’s image in Russia in the short run.

Ikea is also facing problems in France, where a labour conflict has affected the company, culminating in a massive strike over pay at 23 of 26 stores on February 13th.

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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.