Swedish home furnishings giant IKEA said Thursday that despite “unprecedented challenges” caused by the war in Ukraine, supply chain disruptions, increased inflation, and lingering fallout from the COVID-19 pandemic, 2022 had been an “exceptional year.”
The world’s biggest furniture brand reported retail sales of 39.5 billion euros ($38 billion) this financial year, which ran from Sept. 1, 2021, to Aug. 31. That was a 5.6% increase from the previous year’s sales of 37.4 billion euros.
However, inflation and supply chain issues led to rising costs and higher prices, meaning sales quantities were down though they cost more and there were struggles to keep shelves full. Online sales were down 10% from fiscal 2021.
Plus, IKEA’s exit from Russia and Moscow’s ally Belarus because of the war in Ukraine has meant letting go of some 10,000 of its 15,000 workers in both countries.
“We lived up to the challenge – achieving solid performance in a disrupted environment, making tough decisions, while always keeping sight of the needs and dreams of the many,” said Jesper Brodin, chief executive of the holding company Ingka Group that manages most of IKEA’s stores.
He said, “uncertainties will continue to be part of our lives in the coming years.”
Anna Hallqvist Gedda, the chief financial officer of IKEA Sweden, told the Swedish news agency TT that “the fact that more people are chasing lower prices in expensive times seems to have benefited IKEA.”
In March, the maker of flat-pack home products halted its retail operations in Russia after the invasion of Ukraine. It then said it suspended operations at its 17 Russian stores and paused exports and imports there. It also paused operations in Belarus.
Ingka said about 10,000 employees in Russia and Belarus will have left by the end of October.
“Affected co-workers entered a mutual agreement process and were offered a compensation package that significantly exceeded the standard,” the company said in a statement.
It previously said it guaranteed six months of pay and core benefits.
This summer, IKEA was selling the remainder of its Russian inventory online as it moved forward with leaving the country.