Inter IKEA Group, the Swedish parent company behind the global IKEA brand, reported a significant 26% drop in operating profit for its fiscal year ending August 31, 2025, totaling 1.7 billion euros ($1.98 billion), down from 2.3 billion euros the previous year. This profit contraction occurred despite a stable sales volume increase, as the company pursued an aggressive price-cutting strategy to boost affordability amid ongoing global economic challenges and weaker consumer demand. ​
Rising input costs, particularly raw materials and logistics expenses, constituted key factors behind the profit pressure. The company cited increased costs in the second half of the financial year driven mainly by uncertainties surrounding U.S. tariff announcements on goods imported from Europe and China. These tariffs compelled IKEA to raise prices selectively on some imported items, partially offsetting the cost increases, though overall the company absorbed much of the cost impact to maintain its affordability commitment. ​
Sales from IKEA stores worldwide declined slightly for the second consecutive year, totalling EUR 44.6 billion compared to EUR 45.1 billion in the previous year. However, the volume of products sold rose by approximately 3%, reflecting the company’s effective strategy of lowering prices—by around 10% on average over two years—to attract customers grappling with cost-of-living pressures and weak housing markets. IKEA’s approach prioritizes affordability and long-term customer accessibility over short-term profit maximization, capitalizing on its non-public ownership structure which supports strategic, long-term decision-making. ​
Additional factors influencing financial outcomes included modest increases in operating expenses due to integration of new acquisitions in the Baltic region, along with expanded investments in sustainability and digital capabilities. Tax expenses increased due to relatively lower profitability in the main supply company. ​
Despite these challenges, IKEA’s retail operations remain resilient, with growth in store visits and online sales, further supported by expansion into new markets, including the opening of new stores and distribution capabilities. The establishment of a U.S.-based furniture manufacturing facility by a key supplier highlights efforts to mitigate tariff risks and increase supply chain flexibility. ​
In sum, IKEA’s fiscal 2025 results reflect a complex balancing act between managing tariff-induced cost inflation, sustaining competitive pricing to retain consumer demand, and investing strategically for future growth. The large-scale price reduction program, while compressing margins in the short term, aims to solidify IKEA’s market position amid changing global economic conditions, suggesting a cautious but stable outlook going forward. ​