Inter IKEA Boosts Profits Despite Revenue Dip with Strategic Price Cuts

Inter IKEA, franchisor of IKEA, successfully increased profits for 2024 despite a decline in revenues due to significant price cuts on products such as BILLY bookcases. This strategy, aimed at enhancing affordability, contrasts with previous price hikes caused by supply chain challenges. The company also engaged in strategic expansions in Slovakia and Sweden.

Inter IKEA, the entity behind the world's largest furniture brand, has posted higher profits for 2024, attributed to reduced interest payments, even as it experienced a notable dip in revenues.

The decline in revenue followed substantial price cuts across its product range, including popular items like BILLY bookcases. These adjustments were made in an effort to enhance affordability after previous price hikes in 2021-2022, which were necessitated by supply chain disruptions and rising raw material costs.

The CFO, Henrik Elm, stated that prices were cut by an average of 15% over the year, allowing retailers to lower customer prices by an average of 10% due to falling commodity costs. This resulted in a revenue drop of 8.9% to 26.5 billion euros but helped achieve an operating profit increase to 2.3 billion euros.

(With inputs from agencies.)