Ikea loses 1.5 billion euros to corona crisis

Jesper Brodin, CEO Ingka Group, talking to an associate at Ikea
Photo: Ikea

Ikea announced retail sales of 35.2 billion euros in the financial year to September. That is 1.5 billion less than a year earlier, despite online growth of 60%. Nevertheless, this is a strong performance according to the furniture chain.


Slightly fewer visitors and turnover

In its broken financial year 2020, which ran from September 2019 to the end of August 2020, Ikea's stores achieved a turnover of 35.2 billion euros. Management says these are solid results, given the consequences of the corona crisis. Retail sales were 1.5 billion euros lower than last year, when the interior retailer achieved a turnover of 36.7 billion euros.

During lockdowns, 75% of all stores worldwide were closed for weeks. This led to a decline in the number of visitors: over the year as a whole, Ikea had 706 million visitors, compared to 839 million a year earlier. However, the online division did get a big boost: the website was visited a billion times more, accounting for 3.6 billion visitors. Online sales also increased by 60%, while e-commerce picked up by 48% in the broken financial year 2019. Online accounted for 18% of total retail sales.


Substantial investments and corona costs

Ingka Group, Ikea's retail arm, does not publish profit figures, but it does make it clear that it has had high costs due to the coronary pandemic. For example, the chain donated for 26 million euros emergency relief, workers were given income security and flexible working hours, and in those countries where it had received government stimulus, it reimbursed that aid a little later because, according to its own claims, the economic recovery came faster than expected.

Above all, for Ikea, the health crisis marked the start of an accelerated transformation: the stores were used as fulfilment centres and implemented click&collect. The pandemic did not prevent the company from opening 26 new shops, including in Shanghai, Seoul, Moscow and Tokyo. Ingka Group also purchased real estate, including the Kings Mall shopping centre in London and the Rue de Rivoli in Paris.

The company also invested in 3D and visual AI solutions with the acquisition of Geomagical Lab, to develop interactive virtual store layouts for the retailer. As part of its goal to be climate positive by 2030, Ikea also invested a further 600 million euros in sustainability. A total of 3.8 billion euros is currently being invested in sustainability.