Furniture retailer IKEA UK has reported a decline in sales and profit.

According to its latest filed accounts for the year ended 31 August 2024, total sales fell 6.2% to £2.3bn from £2.4bn in 2023.

Pre-tax profit resulted at £72.1m, down from £127.9m recorded in the previous year.

Stated within its report, IKEA said that sales of goods stood at £2.1bn, down from £2.2bn, while food revenues slipped from £108.3m to £77.8m and sales of services were down from £72.5m to £67.4m.

“At IKEA UK, during 2024 we made significant progress in our journey of becoming more affordable, accessible and sustainable,” the retailer said.

“We believe that we create value by securing better lives for our co-workers and communities, creating better homes for our customers, contributing towards a better planet for all and building a better company for now and the generations to come.

“Our approach is underpinned by a thriving business that meaningfully contributes to the world around us, and therefore we evaluate our performance across these four dimensions of our Value Creation map.

“Driven by our commitment to the many people, and in recognition of the continued cost-of-living pressures facing our customers, we invested over £117m to lower the price of some of our most popular products in FY24. Reductions were made on approximately 33% of the range with an average price reduction of 20%, ensuring they are affordable for as many people as possible.

“In line with our decision to prioritise affordability, we also invested in creating a more accessible IKEA for the many people. In line with this commitment, we have reduced our furniture delivery prices, resulting in home delivery service costs that are now 15% lower than in FY23.

“Along with lowering our delivery prices, we offer a wide range of click-and-collect options. In addition to our same-day free click-and-collect service available at all our Stores, FY24 saw the launch of numerous mobile pick-up points at Tesco locations nationwide, making shopping with IKEA even more convenient.

“Over the past year, we fulfilled nearly 240,000 orders through these pick-up points. We also launched a three-location trial of next generation self-serve IKEA lockers at Tesco stores in Werrington, Dereham and Cambridge. For parcel orders we continued our collaboration with DPD. and our customers can collect their orders from one of over 10,000 local DPD points.

“As a result of all the above initiatives, our share of online sales across the country exceeded 40%, with some areas like London reaching 47%. Our physical Stores remain at the heart of our business and our in-store showrooms and carefully designed roomsets continue to be an important source of inspiration for our customers.

“While this investment impacted negatively our FY24 revenue, which decreased by 6.25%, it was the right thing to do. As a result of this decision, we also saw an uptick in demand throughout the year, which continued into this year with a significant increase in number of customers and volumes particularly in key categories like kitchens, bedrooms and storage solutions.

“Despite the significant investments in new lower prices, our gross margin slightly decreased to 30.7% (FY23: 31.7%) as a result of better purchasing prices and also due to the optimisation of our fulfilment network and the cost efficiency achieved through lower cost fulfilment methods (e.g. a 4% increase in volume through furniture click and collect orders from stores and mobile pick-up points vs a 4% decrease in volume through truck deliveries).

“In summary, we are very proud that in a year of adverse economic conditions when the home famishing market had a decline of 5.8%, we decided to make significant investments in prices and the base pay of our co-workers and yet maintain a positive operating profitability of 1.7% (FY23:4.5%).

“We strongly believe that FY24 will form a strong base for the years to come in terms of increased co-worker engagement, improved customer satisfaction and growth in market share. We made major strides in our journey to become more accessible, affordable and sustainable and we are in a strong position to build on these achievements in FY25 and the years to come.”

IKEA recently opened a new store in Brighton (pictured) – read more here.