IKEA UK has announced total sales of £2.2b for the year ending 31st August 2022, which marks double-digit sales growth of +13% YoY.
However, in line with rising costs, operating profits fell to £49.6m (from £61.2m in FY21).
Peter Jelkeby, country retail manager and chief sustainability officer, IKEA UK (pictured), says: “We saw consumers returning to our stores while online sales remained strong with high demand for a convenient shopping experience. To meet these needs, we opened our first small store on the high street, created new ways to meet customers remotely and in-store, and launched new ways to deliver orders. With a variety of stores, service offers and digital solutions that complement each other, our aim is to be there for our customers, however they want to meet us.”
IKEA UK’s total online sales have grown to 36% of the business' total, compared to 19% pre-pandemic in FY2019. While online sales are now nearly twice as high, consumers also started coming back to IKEA UK’s stores, with store visitation increasing by +34% YoY. To meet these changing consumer behaviours, the retailer has continued investing in its long-term vision to become more convenient and accessible by bringing IKEA closer to where customers live, shop and socialise.
IKEA UK opened its first small store on the high street in Hammersmith, West London. It also announced the opening of a store on Oxford Street, London, and new Plan & Order Points in the northwest of England (in Aintree, Preston, and Stockport with more to follow).
IKEA UK has also invested nearly £50m in its fulfilment network: £33m in a 420,000 cu m fulfilment centre in Dartford, Kent, expanding fulfilment capacity by +20% in London, due to open May 2023; and a new collection service with Tesco launched with seven collection sites operational, with a further three in planning in the South East.
While growing sales and numbers of visitors, IKEA UK achieved a -14% absolute reduction in its operational climate footprint over the past year as it works towards contributing to the overall commitment of IKEA to becoming circular and climate positive by 2030.
To enable this, IKEA UK made significant investments in energy efficiency, with new technology trials for reducing carbon emissions and behaviour changes to decrease energy use in stores and distribution centres, as well as to cut waste. Looking ahead, investments in solar panels, electric vehicles, waste minimisation, and heating and cooling solutions will take IKEA UK closer to its climate goals.
IKEA UK also continued its efforts to ensure its staff were supported in these challenging times. As a member of the Living Wage Foundation, IKEA UK will meet the new rates of £11.95 an hour (London) and £10.90 (rest of the UK) as of January 2023. In response to the cost of living crisis, more recently the retailer also announced investments in financial, physical and mental wellbeing measures, to provide further support.
During the year, IKEA UK introduced its first menopause policy and, through the UPPNÅ programme, has successfully offered work placements to 85 refugees since the beginning of the programme in 2020, of which 72% have been retained in permanent contracts.
Despite a strong financial performance, the major global and economic issues, the war in Ukraine and the subsequent inflationary pressure continued to have a significant impact on materials and transportation costs within the global supply chain, and in local energy and other costs. Consequently, IKEA UK’s operating margins reduced to 2.3%, from 3.1% in the financial year 2021.
After absorbing most of the increased costs over the last year, prices were adjusted across large parts of the range in financial year 2022 to reflect this increased cost base. IKEA UK has also implemented a wide range of offers, through the IKEA Family programme, to support its customers in making savings where it can see they are most needed.
Peter adds: "A post-pandemic backdrop of increased living costs, supply chain challenges and macro-economic instability inevitably shaped our business in 2022. In the face of these changes, our long-term vision to create a better everyday life for the many people was our guiding compass for short- and long-term decisionmaking, and our results reveal the positive impact of this approach with healthy financial results representing our financial stability and resilience amidst great change.
“In 2023, we will continue on our journey to create better homes for customers, better lives for co-workers and communities, a better company for now and generations to come, and a better planet for all.”
