IKEA stores owner Ingka confident price cuts will help drive sales

Interior design items are put on display at the IKEA store in London, Britain Nov 28, 2023. REUTERS/Maja Smiejkowska/File photo

STOCKHOLM  – Ingka Group, the owner of most IKEA stores, said on Wednesday it was confident further price cuts would help drive sales volumes in the year to come, after reporting largely flat operating profit for the last financial year.

Sales volumes in the first quarter of the fiscal year that began in September were roughly unchanged from a year earlier however, despite the company spending around 1 billion euros ($1.10 billion) on price reductions in that period, it said.

“We are more or less at similar levels last year when it comes to the volume,” Ingka‘s Chief Financial Officer Juvencio Maeztu said.

“We are… positive that the more price investment we will do in the next month and the next year will cement the belief that IKEA is the right place,” he added.

He declined to detail cuts in percentage terms.

Ingka Group, which accounts for 88 percent of global IKEA sales, reported largely unchanged operating profit for its last financial year to end August, at 2.00 billion euros versus 2.04 billion a year before.

Maeztu told Reuters it could have achieved higher profits in the year but had chosen not to pass on the bulk of its higher costs to customers to keep prices stable.

Ingka said in early October that its retail sales last year grew by nearly 6 percent to 41.7 billion euros, and that it hoped to get a boost from families staying home during the holiday season.

Like its brand owner Inter IKEA, which is in charge of supply, Ingka‘s pre-tax result doubled, coming in at 2.20 billion versus 833 million euros a year ago as high interest rates dented its financials in the previous fiscal year.

Ingka Investments, the investment arm of Ingka, upped its renewable investment guidance for an addition 1 billion, totaling 7.5 billion euros by 2030.

($1 = 0.9112 euros)