Date: Friday, November 5, 2021
Source: Furniture Today
STOCKHOLM — Despite record demand, supply chain issues are hurting Ikea’s profits, which fell 16% to €1.4 billion for the year ending in August.
The privately held Inter Ikea Group, which leads the furniture giant’s supply and franchising, attributed the loss to supply chain challenges in a financial report released Wednesday. The company also said it would be forced to raise prices.
“The pandemic affected our operating income in FY21,” the company said in the release. “The biggest cause was the steep increase in transport and raw material prices in the second half of the financial year.
“The global transport crisis challenged us to keep Ikea stores well-supplied throughout the year. Costs rose for recruiting additional staff to handle a complex transport and shipping environment in efforts to secure the availability of products.
“Keeping Ikea stores and warehouses stocked has been a challenge. Supply chain disruptions led to a substantial drop in the availability of products that we have yet to recover from. We expect this will continue far into FY22.”
Ikea did see some gains though. Retail and online sales increased in 2021.
“Despite lower store sales, total retail sales for FY21 were 5.8% higher compared to FY20, driven by online sales and increased interest in home furnishing. Online sales increased 73%, and there was high demand for office furniture and other multifunctional solutions for the home.”
Ikea didn’t say how much it would raise prices. This would be the first increase since 2019.