The world’s largest furniture retailer, Ikea, has reported a steep 32 percent drop in annual profits, blaming aggressive price cuts and higher U.S. import tariffs for the decline.
Profit after tax fell to €1.5 billion ($1.7 billion) in the 2024–2025 fiscal year, down from €2.2 billion the previous year, according to Inter Ikea, the brand’s main holding company.
Chief financial officer Henrik Elm said the drop was a calculated move. “We saw effects based on the big price decreases,” Elm told AFP, adding that Ikea had allocated between €2 and €3 billion over two years to cut prices by 10 percent after pandemic-era hikes.
Despite the profit squeeze, the strategy appeared to pay off in volume. Sales fell slightly by 1 percent to €44.6 billion, but sales volume rose by 2.6 percent, and store visits increased by 1.9 percent.
Elm said the company’s aim was to “break the trend” of rising prices and reinforce Ikea’s image as a value-driven brand. Still, the retailer faced mounting supply chain expenses and U.S. tariffs imposed by President Donald Trump, which inflated sourcing costs and cut into margins.
Inter Ikea’s operating profit slipped 26 percent to €1.7 billion, with the company admitting it had partially absorbed the tariff costs to maintain competitiveness in North America, which accounts for 10 percent of its sales.
Looking ahead, Elm expressed measured confidence: “We are cautiously optimistic about 2026 and beyond because we’re in a good position to take the benefits we can.”
Founded in 1943 by Ingvar Kamprad, Ikea remains privately held and has faced scrutiny over its financial opacity. The group began releasing partial financial results in 2010 following allegations of tax optimization schemes.
