Connect with us

Hi, what are you looking for?

Editor’s Pick

Ikea owner warns of price rises as supply chain crisis takes toll

The prices of Ikea furniture and homeware are to rise as a result of lasting disruption to its supply chain, the brand’s owner has warned, after increased costs of raw materials and transport knocked its full-year profits.

Inter Ikea Group, the parent company of the Ikea brand, which is operated by a string of franchise businesses, said it expected challenges in its supply chain to last well into 2022.

Like many home furnishing retailers, Ikea benefited from soaring demand for its products during successive coronavirus lockdowns as consumers who were confined to their homes decided to spend money on sprucing them up.

Despite this, Inter Ikea Group’s pre-tax profit fell by 16% in the fiscal year to the end of August to €1.7bn (£1.4bn). Profits were 4% lower than the privately held company reported in 2019 pre-pandemic despite achieving record sales.

The owner of the flat-pack furniture company said: “The global pandemic affected our operating income in FY21. The biggest cause was the steep increase in transport and raw material prices in the second half of the financial year.”

The company, which mostly makes money from selling goods to its franchise partners, in October reported record annual sales at its stores during the year to August.

“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,” the firm said, adding that it expected this situation to continue well into next year.

The company has previously said one of its biggest challenges is exporting products from China, where about a quarter of its goods are produced. Its North American shops have been the most affected by product shortages, followed by stores in Europe.

The retailer has been temporarily removing out-of-stock items from its website and stores, to avoid disappointing shoppers, and has suggested other products instead.

Inter Ikea said it would have to pass on some of its higher costs to the brand’s stores during the coming year.

“Though we can’t continue to secure fixed prices to the retailers under these challenging conditions, we also plan to absorb part of the increased costs during FY22,” it said.

It will be up to store owners how much of those price increases that they decide to pass on to consumers.

The firm last month described the extra measures it has been taking to transport materials from Asia to Europe to get round shipping bottlenecks, including hiring its own trains.

Jon Abrahamsson Ring, the chief executive of Inter Ikea, told the Financial Times that the “availability and raw materials challenge” would last “for a longer period than we thought of at the beginning of the crisis”.

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



REUTERS TRADE Secretary Alfredo E. Pascual’s intention to join more free trade agreements received backing from major business chambers, who declared support for participating...


NATIONAL IRRIGATION ADMINISTRATION PHOTO RELEASE SUBSIDIES provided to government-owned and -controlled corporations (GOCCs) declined by 82.31% year on year to P7.905 billion in May,...


PHILIPPINE STAR/ MICHAEL VARCAS AGRICULTURE and fisheries planning needs to be more “bottom-up” to better meet the needs of farmers and fisherfolk, steering away...


REUTERS ERIC BROTEN had planned to sow about 5,000 acres of corn this year on his farm in North Dakota, but persistent springtime rains...


(First of two parts) Family-run businesses require structures that are necessary to ensure a smooth transition. In the Philippines, the wealth of ultra-high net...


THOUSANDS of supporters of President Ferdinand “Bongbong” R. Marcos, Jr. are unfazed by the rain during a free concert held in Manila on the...

You May Also Like


BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...


REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...


COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Financial Advisors

The healthcare ecosystem is one that has thrived on the cusp of scientific progress, benefitting enormously from the winds of change in the technological...

Disclaimer: Respect, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.