Kathrine Frich
After years of steady growth, Ikea has reported a sharp drop in profits for the past fiscal year.
Executives say price cuts and new import tariffs under Donald Trump’s trade policy have weighed heavily on earnings, even as more shoppers visit stores and buy more products.
Tariffs and shrinking profits
Ikea’s profit after tax fell by 32 percent to €1.5 billion for the 2024–2025 financial year.
Henrik Elm, the company’s chief financial officer, said that higher sourcing costs and “big price decreases” played a key role in the decline.
Following price increases during the pandemic, Ikea later set aside up to €3 billion to lower retail prices by about 10 percent.
“To lower our prices to our customers is a part of our business model and business idea,” Elm said.
The strategy has brought more people through the doors.
While total sales dropped by 1 percent to €44.6 billion, the company recorded a 2.6 percent rise in sales volume and nearly 2 percent more store visitors.
Trump’s tariff plan
In September, U.S. President Donald Trump announced plans for major tariffs on imported furniture.
He wrote on Truth Social that the move was meant to revive furniture manufacturing in states such as North Carolina, which he said had “completely lost its furniture business to China and other countries.”
Ikea, which has fifty stores in the United States and earns about ten percent of its global revenue there, has already felt the effect of those tariffs.
Inter Ikea, the group’s parent company, said in a statement that “the higher sourcing costs included the costs for increased tariffs, which have been partly absorbed.”
Changing retail landscape
Despite the difficult year, Ikea remains optimistic about its long-term position.
“We are looking cautiously optimistic on 2026 and beyond because we are in a very good position to take the benefits we can,” Elm said.
The company has also been adjusting its store strategy. In June 2025, Ikea confirmed the closure of its Plan and Order Point locations in Stockport and Aintree, both in the United Kingdom.
These smaller outlets were part of a test format focusing on kitchen and furniture planning services.
Salma Azad, Ikea’s area manager, said the closures came after a “careful evaluation” and would help shape future store concepts.
“We’ve taken valuable learnings, including how our customers prefer to meet Ikea, and we’ll take these insights into future openings,” she said.
Sources: Inter Ikea, Politico, Truth Social, Daily Star
This article is made and published by Kathrine Frich, who may have used AI in the preparation
