Price cuts, US tariffs see Ikea annual profits drop
By Josh White
Date: Friday 07 Nov 2025
(Sharecast News) - Sweden's Inter IKEA Group reported a sharp drop in annual profit for the 2025 financial year on Friday, as price cuts aimed at boosting affordability and rising US tariffs weighed on margins, though sales volumes increased across its global retail network.
Operating profit fell 26% to €1.7bn for the year ended 31 August, down from €2.3bn a year earlier, while total revenue edged lower to €26.3bn from €26.5bn.
The group said higher sourcing and logistics costs, particularly in the second half, reflected the impact of new US import tariffs and broader supply chain volatility.
"Commodity prices and logistics costs rose following uncertainties linked to US tariff announcements," the company said.
The increased costs were "partly absorbed," it added, noting that profit levels remained in line with expectations.
Retail sales across IKEA's 63 markets slipped slightly to €44.6bn from €45.1bn, marking a second consecutive annual decline, but sales volumes rose about 2.6% as shoppers responded to price reductions introduced over the past two years.
"We view FY25 as a stable year in terms of financial results," said Henrik Elm, chief financial officer of Inter IKEA Group.
"I'm very proud of how we responded to multiple challenges to deliver a steady result in line with our overall ambitions."
Elm said the group's decision to lower prices by around 10% over two fiscal years - amounting to between €2bn and €3bn in reductions - had successfully driven traffic and volume growth.
Wholesale sales volumes rose about 6% year on year as IKEA retailers bought more stock to replenish inventories and improve product availability.
Elm said the company was "in a very good position" to benefit from stabilised costs in the coming year and pointed to new investments in sustainable production, including a Lithuanian facility to recycle wood for particle boards and the purchase of 8,000 hectares of forest in Latvia to secure future raw materials.
Despite the pressure on profitability, Elm said the company had stabilised its profit base after several turbulent years, adding that the focus on affordability would continue.
"It puts us in a good position to continue lowering prices, allowing more people to create a better life at home through affordable living," he said.
Reporting by Josh White for Sharecast.com.
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