Volkswacht Bodensee - 'Challenging' year for Ikea, 10,000 layoffs in Russia

Following Russia's invasion of Ukraine, Ikea closed its 17 shops and halted production in the country, where it was one of the largest Western employers before the war with 15,000 employees.

According to Dutch holding company Inter Ikea's CEO Jon Abrahamsson Ring, a "substantial reduction" of employees had already been carried out.

The 2022 fiscal year "was a challenging year for the world, of course with all the things going on around us with pandemics but also very steep increasing inflation," Abrahamsson Ring told AFP.

Jesper Brodin, the CEO of Ingka, a holding company that manages most of Ikea's stores, told AFP that they "had to say goodbye" to around 10,000 staff out of the 12,000 retail employees in Ikea's Russian stores.

Before the war, the Russian market represented about four to five percent of the group's sales.

Total sales from the international furniture behemoth's hundreds of shops came in at 44.6 billion euros ($43.4 billion) for the period September 2021-August 2022, Inter Ikea said in a statement.

However it meanwhile noted that "sales have grown in money, but sales quantities have not kept up. In addition, supply chain shortages made it difficult to keep Ikea shelves full."

Excluding currency effects, revenue growth was lower at 3.5 percent.

"We had to increase our prices across the whole of Ikea," Abrahamsson Ring said.

- Price rises -

The chief executive explained that the operations had been hurt by supply constraints -- especially in Asia -- plus increased prices for raw materials and the situation in Russia.

In December 2021, as the current wave of inflation began rearing its head, Ikea announced an average increase of nine percent in its prices.

Raising prices was "against our mission, but we were forced," Abrahamsson Ring said, adding that while they did not want to raise prices more they "can't exclude it."

The furniture giant -- which in recent years has started launching new smaller stores close to the city centre -- had a total of 474 stores at the end of August, compared to 458 a year earlier, despite the closures in Russia, the company said.

During the year, Ikea also opened its first store in South America, in the Chilean capital Santiago.

Brodin meanwhile said that on the supply front "there was a much improved situation" in recent months, "even if we're not back to normal."

"By the end of the (fiscal year) we actually had double digit growth, we hadn't seen that in a long time," Brodin told AFP.

Founded in 1943 in southern Sweden by the late Ingvar Kamprad, Ikea is not listed on any stock exchange and is therefore not obliged to communicate its financial results.

Following accusations of a lack of financial transparency and tax optimisation schemes, the group started publishing partial results in 2010.

C.Meier--BTB