The company informed its ready-to-assemble home furnishings and other products are getting more expensive because keeping stores and warehouses with adequate stock is getting harder due to higher transport and raw material costs.
According to Ikea, the business outlook remains “extremely challenging” despite economic recovery, with more than 150 stores closed due to lockdown, resulting in lower store sales. Another reason is the global transportation disruption due to the pandemic, which increased prices for shipping and raw materials even though the demand is high. Inter Ikea Group has spent an additional €250 million to mitigate these alterations.
However, e-commerce sales increased by 73%, total retail sales by IKEA franchisee’s amounted to €41.9 billion, a 5.8% increase year-on-year. FY2021 sales also surpassed FY 2019.
The Swedish furniture giant suffered a drop in full-year profits as a result of the supply chain crisis. It warned that it would be forced to pass some of these costs onto its franchise outlets, which would then be free to charge customers more