Ikea set for spending spree as profits boom

Swedish furniture giant Ikea reported on Wednesday an 8-percent rise in full-year profit and said it was benefiting from more cost-conscious consumers.

Ikea set for spending spree as profits boom

Net profit rose 8 percent to 3.2 billion euros ($4.3 billion) as revenue rose 9.8 percent to 27.6 billion euros in the year ending August 31st.

“Customers are getting more and more value conscious, which makes Ikea a better choice,” Mikael Ohlsson, chief executive of the Ikea Group, said in a statement.

“The economic conditions throughout the world are challenging and have affected people’s lives and consumption,” he added.

Operating profit was down three percent as raw material prices rose and the company tried to keep more products in stock by raising inventories.

“To make sure that our customers always find the products they need when shopping at Ikea, inventory levels were kept deliberately high, a step that in turn supported sales,” Ohlsson said.

The company, the world’s biggest furniture retailer, which is an unlisted, family-owned company that only recently began releasing more regular earnings reports, said around 4.6 percent of its growth came from existing stores after adjusting for currency changes.

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“Some of the biggest growth was in China, Russia and Poland, but the US and Germany also had significant growth,” Ohlsson said.

Europe accounted for 70 percent of sales, while North America stood for 16 percent and Russia and Asia and Australia made up the remaining 14 percent.

The Ikea Group opened 11 new stores in nine countries in the period. At the end of the year, it had a total of 298 stores in 26 countries.

Speaking with Swedish business daily Dagens Industri (DI), Ohlsson said Ikea plans to open 25 new stores this year and will likely need to hire 75,000 new employees in the coming years.

“We’re never satisfied,” he told DI.

Traffic to its website rose by 21.8 percent to more than a billion visits.

Ikea, which sparked controversy last year when women were removed from the pages of its Saudi Arabian catalogue, also said it had launched “a common diversity and inclusion approach.”

“Today, almost half of our 17,000 managers are women, and our co-workers come from all cultural and educational backgrounds,” the company said.

AFP/The Local/og

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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.