LONDON, 7 November 2025 — Inter IKEA Group, the Swedish parent company that owns the IKEA brand and supplies products to its stores globally, reported a 26% decline in annual operating profit to €1.7 billion (US$1.98 billion) for the financial year ended 31 August 2025, as higher U.S. tariffs and logistics costs weighed on margins.
Revenue slipped to €26.3 billion from €26.5 billion a year earlier, while global IKEA retail sales across 63 markets dropped for the second consecutive year to €44.6 billion (US$52.01 billion). The company said the decline reflected its ongoing global strategy to reduce prices amid weaker consumer sentiment and inflation pressures.
“Commodity prices and logistics costs rose in the second half of the financial year due to uncertainties following U.S. tariff announcements,” Inter IKEA said in a statement.
Tariffs Drive Cost Surge Despite Price Cuts
While IKEA’s aggressive price cuts have boosted volume sales, higher import costs in the United States, driven by tariffs on European and Chinese goods, forced the company to raise prices on select U.S. products.
To cushion the impact, Lithuanian furniture manufacturer SBA Group, a key IKEA supplier, opened its first U.S. production plant in North Carolina, manufacturing popular items such as the BILLY bookcase and KALLAX shelving units.
“The factory was planned well before U.S. President Donald Trump’s tariff-hiking policies,” said Henrik Elm, Chief Financial Officer of Inter IKEA. “But it is very timely, of course, since that is also helping us to mitigate the effects of the tariffs on those top-selling products.”
Despite the profit drop, wholesale sales volumes rose by around 6% year-on-year, as customers responded positively to IKEA’s lower prices in other markets.
Global Retail Landscape and Strategic Outlook
The results underscore the dual challenge facing IKEA, balancing its identity as a low-cost global retailer while navigating the realities of tariff uncertainty, high logistics costs, and changing consumer preferences.
Industry analysts note that IKEA’s long-term investments in regional manufacturing and supply-chain localisation could help buffer future tariff shocks, particularly in North America.
The company’s continued focus on price competitiveness, alongside sustainability-led manufacturing, is seen as part of its broader effort to maintain global leadership in the affordable home furnishing segment amid rising cost pressures.
