Ikea sales slide again as affordability push meets weak demand

Sales, profit and what drove the slowdown

Ikea's top line shrank for the third consecutive year, with currency-adjusted revenue easing 0.7% to €43.8 billion over the 12 months to August. Inter Ikea Group - which holds ownership of the Ikea concept and provides goods for its retailers - reported operating profit of €1.46 billion, down 15%.

Management described a tough backdrop marked by the cost-of-living squeeze and demand from retailers that fell below the prior year. Prices were kept largely steady even as some regions saw supply-chain snags that raised commodity and logistics costs, prompting a cost-cutting drive that included 850 job reductions.

Pricing playbook and early read on demand

Affordability is front and center. "The most important for me is affordability," Chief Executive Officer Jakub Jankowski said. "We need to continue to lower prices for our customers." He also wrote that sales have "stagnated for several years" and said the company needs to return to growth to reach more people.

In September, Inter Ikea together with its retailers pledged about €1.2 billion for a new round of European price reductions, with Inter Ikea lowering wholesale prices while retailers layered on additional cuts. Those actions follow sizable fiscal 2024 reductions that boosted wholesale volumes by roughly 6% in the subsequent year, even as higher sourcing costs and tariffs pressured revenue and margins. "We are growing, so this is positive," he said. "I would like to see a bit more time to pass with the good result to say that this is a stable trend."

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Restructuring and the store map

Jankowski said Ikea has been slimming operations he described as too "complex and fragmented," with the goal of speeding up and simplifying the organization. The company is not planning layoffs beyond those already announced.

The store network is evolving too. Retailers in Europe and North America continue to open smaller formats, and the company will shut seven stores in China as it adjusts to a quicker pivot toward online shopping and home delivery.

Why it matters for your portfolio

Ikea is leaning into price to defend share while trimming costs in the background. The trade off is clear in the numbers: lower prices helped volumes, but higher sourcing costs and tariffs pinched revenue and margins. The early sales pickup in Europe is a positive sign, yet the company's own caveat applies - durability is unproven. If value-led demand holds, suppliers and retailers tied to affordable home goods could see steadier orders, but the broader trajectory still depends on consumer budgets stabilizing.

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