Inter IKEA Group has improved its gross margin while lowering prices and reports a stable operating profit for financial year 2024 (FY24).

Costs have continued to come down during FY24, enabling lower prices for IKEA customers which is positively impacting store visitation and volumes.

Inter IKEA Group’s overall financial performance is closely connected to the retail sales performance of the IKEA franchisees, which in FY24 reached EUR 45.1 billion. Price reductions across all 63 markets resulted in a decrease of 5.3% (4.0% when adjusted for currency impact) compared to FY23.

“Since the second half of FY24 sales volume, as well as store and online visitation, are on their way up,” says Henrik Elm, CFO of Inter IKEA Group.

Inter IKEA Group recorded total revenues of EUR 26.5 billion (EUR 29.1 billion in FY23), including wholesale sales to IKEA retailers, franchise fees and retail sales from the IKEA Delft store. Operating profit is stable compared to FY23 while net profit is up to EUR 2.2 billion following a change in the funding structure.

“The declining cost trend continued into FY24, which enabled Inter IKEA Group to substantially lower wholesale prices to IKEA retailers. Effectively, this has led to an average global reduction of 10%, allowing IKEA retailers to lower their prices to customers,” says Henrik Elm.

Operating expenses include a significant one-off investment in marketing to support IKEA retailers in communicating the lower prices to customers. Excluding this investment, expenses decreased slightly due to good cost control.

A change to Inter IKEA Group’s funding structure in FY24 resulted in lower interest payments. This improved the net profit result considerably. At the same time, the Group’s annual tax expense and effective tax rate (ETR) went up compared to FY23.

Over the past financial year Inter IKEA Group has expanded its focus on major investments in several areas – lowering prices, marketing and developing manufacturing activities. Together, these will create greater stability in both the IKEA franchise system and the entire IKEA value chain.

Two of the manufacturing investments were made to secure long-term growth of the ever-popular BILLY bookcase series and PAX wardrobe system. The new BILLY factory in Slovakia, covering 35,000 sqm, is one of the most modern and highly automated in the world. While the expansion of an existing factory in Hultsfred, Sweden, will increase the production capacity of PAX to meet current and increasing demand. The new factories employ sustainability-focused solutions, such as solar panels and rainwater harvesting.

In August 2024, Inter IKEA Group signed a share and purchase agreement to acquire direct ownership of IKEA retail operations in the Baltic States from the current franchisee. Pending regulatory approval, the purchase is due to be finalised in December 2024. This will put Inter IKEA Group in a better position to learn and further develop the IKEA concept and create more value for IKEA customers everywhere.