Ikea Reports 1% Drop in Sales Amid Low Consumer Confidence

Swedish furniture giant Ikea announced a 1 percent drop in sales for its fiscal year 2024-2025, attributing the decline to price reductions and a general tightening of consumer spending. The company’s total sales for the year, which ended in August 2024, fell to 44.6 billion euros (approximately $52 billion).

Despite the overall sales decline, Inter Ikea, the holding company of Ikea, reported a 3 percent increase in customer traffic and sales volumes. Jon Abrahamsson Ring, chief executive of Inter Ikea, explained that the focus over the past two years has been on lowering prices and boosting customer growth.

Consumer Sentiment Remains Low

Over the last two years, Ikea has implemented price cuts totaling 10 percent to encourage shopping at both online and physical stores. Despite these efforts, Abrahamsson Ring highlighted a persistent issue: “Consumer confidence has been decreasing for several years. The past year it has flattened out, but it is still at a very low level compared to many decades back.”

This decline in confidence has led many consumers to delay home renovations and furniture purchases, a trend observed across all 63 of Ikea’s markets. Abrahamsson Ring noted that the company plans to continue its pricing strategy, aiming for annual reductions in the range of 1 to 3 percent.

Trade Policies and Future Outlook

Looking ahead, Abrahamsson Ring reported that the current fiscal year is “starting well,” with growth in customer volumes and visitation. He expressed optimism about financial performance, stating, “We’re also growing in money.”

In light of recent developments, he also called for “predictable and consistent” tariff policies. This comes after new tariffs imposed by the United States on imported wood, furniture, and kitchen cabinets took effect this week. A significant portion of Ikea’s products sold in the US are imported from Europe, which currently face a 15 percent tariff as a result of a trade agreement between the United States and the European Union.

Although Ikea is not subject to the recent 25 percent tariff on certain upholstered furniture and kitchen cabinets, Abrahamsson Ring emphasized the importance of stable trade agreements for business operations. “We believe that open, rule-based trade is always the best… It’s good for Ikea, but it’s also good for the world,” he stated.

As Ikea navigates these challenges, its strategy to prioritize customer growth and competitive pricing will be crucial in regaining consumer confidence in an uncertain economic landscape.