Inter Ikea, master franchiser of the Ikea stores, saw its profit grow by 13% last year, exceeding 2 billion euro. Consumers spend more on furniture in times of corona, and margins increased.
In the past financial year, Ikea achieved a pre-tax profit of 2.02 billion euro. That is 13% more than a year earlier. According to the furniture retailer, on the one hand consumers spent more on furniture because they had spare travel budgets, and on the other hand margins increased due to lower wood prices. Although turnover had fallen by 4% due to lockdowns, profits therefore remained strong.
In the meantime, however, the second wave of the corona pandemic is raging: 10% of Ikea stores are now closed again. Nevertheless, Martin van Dam, CFO of Inter Ikea, thinks that the new wave will not have as heavy an impact on sales as the previous one. Almost everywhere, click & collect or even home delivery is now possible, which should absorb part of the loss in sales. September and October were also still strong months.
The pandemic did cause disruptions in the supply chain, partly because there was less intercontinental shipping. As a result, at the end of August Ikea had 15% less stock than a year earlier. Although this is cost-efficient, Inter Ikea – which also supplies the stores – fears a shortage of supply. Production has now been increased and Inter Ikea, which does about a tenth of the production itself and purchases the rest from suppliers, says it has also offered financial support to suppliers so that they would not go bankrupt.