Furniture retailer IKEA UK has announced its 2023 financial year results, highlighting growth following major developments in its ongoing UK transformation plan to become more accessible, affordable and sustainable.
Overall, IKEA delivered an 11.9% growth in sales and turnover of £2.46bn, supported by increases across in-store visitation (+2.2%), online sales (+19%), remote sales (+24%) and click & collect purchases (+48%).
IKEA added that the ongoing development of its fulfilment capabilities reduced costs and improved its gross margin, which grew to 31.7% (2022: 30.5%). Profits rose to £111m over the period, up from £49.6m the year before.
The retailer’s strong performance reflects continued investment in a more accessible IKEA through the introduction of new offerings including Plan & Order Points (smaller stores dedicated to kitchen, bedroom, and living room planning) in the North West of England, alongside a new mobile collection service that is being rolled out nationally in partnership with Tesco.
Investments in logistical operations were also essential to IKEA’s performance in FY23. As well as enabling faster and more sustainable deliveries to meet the growing demands of IKEA’s online and offline business, the opening of a multi-million-pound customer distribution centre (CDC) in Dartford resulted in increased fulfilment and cost efficiencies, alongside growth.
At the same time, IKEA has been investing in cost transformation projects focused largely on improved energy and waste management. Despite inflationary pressures in FY23, IKEA decreased its operating cost ratio to 27.8% (FY22: 29.1%), positively impacting operating profitability, which grew to 4.5% of total turnover (FY22: 2.3%).
IKEA said it achieved one million new visits to IKEA UK stores (+2.2% vs FY22), while click & collect purchases rose 48%, with remote sales up 24%.
It has continued with its national roll-out of over 70 additional mobile pick-up points in partnership with Tesco, which is set to be complete by Autumn 2024. Meanwhile, new city stores have been announced for Oxford Street and Brighton.
Peter Jelkeby, CEO and Chief Sustainability Officer, IKEA UK & Ireland, said: “In our 80th year, we can be proud of our performance. FY23 was a year in which we improved our customer experience, grew our market share and continued making meaningful investments in our business and people.
“Having overcome challenges posed by Brexit and COVID, we have since focused on a creating a more efficient organisation and improving our profitability, which gives us the financial strength to continue investing for generations to come. Despite a difficult economic climate, our focus remains on new locations, new store formats, and in new services.
“As we look to the future, we are proud to have kickstarted 2024 by lowering a significant volume of prices, with more to come; underscoring our commitment to being on the side of those with the lowest means. Guided by the foundations set out 80 years ago, we’ll continue building a business that contributes to better homes for our customers, better lives for co-workers and communities, and a better planet for all.”
