IKEA Profits Level Off as Price Cuts Drive 2.6% Volume Growth

Inter IKEA Group, the worldwide franchisor for the IKEA brand, reported a net income of €1.5 billion (MX$31.4 billion) for the 2025 fiscal year, a decrease from the €2.2 billion recorded in the previous year. The company characterized the results as a "return to normal levels" following a period of fluctuating global market conditions. The decline in profit was primarily attributed to lower operating income and reduced interest income on cash balances.

Total revenues for the group remained relatively stable at €26.3 billion, compared to €26.5 billion in FY24. This stability persisted despite Inter IKEA Group's decision to maintain lower wholesale prices for its franchisees, a move first introduced in FY24 to bolster consumer affordability.

While these lower prices resulted in a decreased gross margin of 14.2%, down from 16.0% in FY24, the strategy successfully spurred consumer demand. IKEA retail sales volumes grew by 2.6% during the fiscal year, which ended Aug. 31, 2025.

"The continued effect of the lower prices [was] offset by higher sales volumes," the company stated in its annual financial summary.

Total IKEA retail sales, which include sales from 13 groups of worldwide franchisees, reached €44.6 billion in FY25. Although this represents a 1% slight decline from the previous year, store visitation increased by 1.9% to 915 million visits.

Ikano Retail, the IKEA franchisee for Mexico and several Asian markets, concluded its 2025 fiscal year with total revenues of €1.1 billion. The Mexican market accounted for €182 million of that figure, a result that aligns with the scale of its local footprint, which currently consists of three physical locations, an e-commerce platform, and a multichannel distribution center.

The company opened Mexico’s largest store in the country with the launch of Ikea Guadalajara Expo, a 37,000m2 space featuring 8,400 products, with 2025 being the first full year of operation. “Sales at Ikea Guadalajara Expo helped the business increase its turnover by 71% compared to last year. The new store offers residents more ways to shop, explore, enjoy Ikea Food, and find ideas for their homes,” shared the franchise. 

The brand's digital transformation continued to gain momentum, with online sales now accounting for 28% of total turnover. To support physical growth, IKEA opened 66 new sales locations globally, ranging from traditional full-size stores to smaller "plan and order" points.

Global Supply Chain Volatility

While FY25 began with a downward trend in raw material and commodity prices, the second half of the year saw increased volatility. Inter IKEA Group cited uncertainties surrounding announced US trade tariffs as a primary driver for fluctuating commodity markets and higher sourcing costs. Despite these headwinds, the group maintained a strong financial position with an equity ratio of 85%. A total dividend of €1.4 billion is slated for distribution to the Inter IKEA Foundation, the group's sole owner.