IKEA has today announced its 2023 financial year results, highlighting growth following major developments in its ongoing UK transformation plan to become more accessible, affordable and sustainable.
Overall, IKEA delivered an 11.9% growth in sales and turnover of £2.46bn, supported by increases across in-store visitation (+2.2%), online sales (+19%), remote sales (+24%) and click & collect purchases (+48%).
A MORE ACCESSIBLE IKEA
The retailer’s strong performance reflects continued investment in a more accessible IKEA through the introduction of new offerings including Plan & Order Points (smaller stores dedicated to kitchen, bedroom, and living room planning) in the North West of England, alongside a new mobile collection service that is being rolled out nationally in partnership with Tesco, boosting convenience for customers.
Peter Jelkeby, CEO and chief sustainability officer, IKEA UK & Ireland, said: “In our 80th year, we can be proud of our performance. FY23 was a year in which we improved our customer experience, grew our market share and continued making meaningful investments in our business and people.”
Investments in logistical operations were also essential to IKEA’s performance in FY23. As well as enabling faster and more sustainable deliveries to meet the growing demands of IKEA’s online and offline business, the opening of a multi-million-pound customer distribution centre (CDC) in Dartford resulted in increased fulfilment and cost efficiencies, alongside growth.
At the same time, IKEA has been investing in cost transformation projects focused largely on improved energy and waste management. Despite inflationary pressures in FY23, IKEA decreased its operating cost ratio to 27.8% (FY22: 29.1%), positively impacting operating profitability, which grew to 4.5% of total turnover (FY22: 2.3%).
Jelkeby continued: “Having overcome challenges posed by Brexit and COVID, we have since focused on a creating a more efficient organisation and improving our profitability, which gives us the financial strength to continue investing for generations to come. Despite a difficult economic climate, our focus remains on new locations, new store formats, and in new services.”
As the cost-of-living crisis continued to impact customers, IKEA saw a clear pattern emerge. In response to economic strain, customers sought durable solutions that enhanced the dual role of the home as a sanctuary and a space for work and leisure activities. The importance of storage across the home was reflected in sales of IKEA’s highly adaptable PAX and KOMPLEMENT wardrobe systems, which increased 49% and 39% respectively, with the BESTÅ storage system growing by 25%.
Key FY23 Highlights
Better business
Despite challenging market conditions, IKEA continued to make important strategic investments in its journey to become more affordable, accessible, and sustainable. The retailer’s strong performance in FY23 gives IKEA the financial strength to continue investing in its business and meeting the needs of both people and planet in the years to come:
- £2.46bn annual turnover
- 11.9% growth in sales
- 4.5% operating profit (of total turnover)
- 1 million new visits to IKEA UK stores (+2.2% vs FY22)
- 19% growth in online sales (38.5% share of total sales in FY23)
- 24% growth in remote sales
- 48% increase in click & collect purchases
- New city stores announced for Oxford Street and Brighton
- National roll-out of over 70 additional mobile pick-up points in partnership with Tesco underway (and set to be complete by Autumn 2024
Better homes
- IKEA opened three new Plan & Order Points launched across the North West in Aintree, Stockport and Preston (with more to come), helping customers to plan bespoke kitchen, bedroom and living solutions.
- IKEA announced its first patent pledge on ‘Anchor and Unlock’- an anti-tip-over safety innovation launched across the VIHALS range to help make life at home safer for the many
- ‘Nytillverkad’ collection launched to celebrate 80 years of IKEA; classic designs reimagined in fresh colours and new materials
Better lives
At the heart of IKEA’s business is a vision to create a better everyday life for the many people. This means contributing to the financial, mental and physical wellbeing of all co-workers, as well as the wider communities in which the company operates:
- £10.90/£11.95 per hour Living Wage Foundation rates met
- £12m support package provided to co-workers in FY23, with £35m investment announced for FY24
- Partnership established with homelessness charity, Shelter, advocating for the development of 90,000 social houses per year by 2030
- 93 work placements provided to refugees through IKEA UPPNÅ Skills for Employment programme
- £48,786 raised for LGBTQ+ charities
Better planet
IKEA continued to make important progress towards its ambitious sustainability goals in FY23, supporting the retailer’s commitment to become a climate positive business by 2030. This means reducing more greenhouse gas emissions than the IKEA value chain emits, while growing the business:
- 100% renewable electricity use in stores and distribution centres
- 13,960,263 kWh per year generated by Dumfries wind farm (powering up to three IKEA stores)
- New customer distribution centre launched in Dartford, powered by 100% renewable energy and operating a fleet of electric vehicles to reduce carbon emissions
- £4.5m investment announced in national EV charging infrastructure 25% of all last mile deliveries were zero-emission by the end of FY23
- 50% reduction in food waste since 2017
- 31.9% (vs. 29% in FY22) of total sales represented by People & Planet Positive range – products designed to help customers save money and create a more sustainable life at home
- 52,380 pieces of furniture traded and given a second life through IKEA BuyBack & Re-sell scheme (up 187% vs FY22)
- 500,000+ free spare parts provided to help customers prolong the life of their products
- New mattress removal & recycling scheme launched
A MORE AFFORDABLE IKEA
Jelkeby concluded: “As we look to the future, we are proud to have kickstarted 2024 by lowering a significant volume of prices, with more to come; underscoring our commitment to being on the side of those with the lowest means. Guided by the foundations set out 80 years ago, we’ll continue building a business that contributes to better homes for our customers, better lives for co-workers and communities, and a better planet for all.”
