Ikea profits fell 26% to €1.7 billion in the financial year ending 31 August 2025, as higher commodity and logistics costs—partly linked to USA tariff uncertainty—and broad price cuts weighed on margins.
Total revenue at the brand owner and franchisor Inter IKEA Group edged down to €26.3 billion, while global Ikea store sales declined for a second year, even as units sold and footfall increased.
Ikea profits under pressure from tariffs
Inter IKEA said rising raw-material and freight prices in the latter half of the year narrowed profitability. Tariff-related costs on goods bound for the United States added pressure, with some USA prices adjusted on items imported from Europe and China. The group cited ongoing uncertainty over trade policy for elevated supply-chain and logistics costs.
Price cuts lift volumes but squeeze margins
Across markets, Ikea continued an affordability push, reducing prices on many high-volume products to defend market share.
The strategy helped volumes: wholesale shipments from Inter IKEA increased even as euro-denominated sales slipped. But the lower average selling prices and cost inflation compressed operating margin, contributing to the €1.7bn result.
Retailer Ingka bucks the trend
The largest Ikea retailer, Ingka Group, reported higher operating and net profit for FY2025, despite a 1.6% drop in retail sales to roughly €39 billion. Ingka pointed to modest growth in quantities sold, more store visits, and a larger online share as it expanded locations and kept headline prices low.
The divergent trajectories underscore the split between the brand owner (Inter IKEA Group) and the retailer (Ingka Group) within Ikea’s franchise model.
Nordic and EU context: affordability meets resilience
For Nordic and wider EU consumers, the picture is mixed: Ikea’s price reductions support purchasing power, but trade frictions and shipping costs can offset gains, particularly for imported ranges.
Suppliers and retailers are adapting—through nearshoring, additional capacity, and range optimization—to reduce exposure to tariff swings and logistics bottlenecks. The company’s scale and private ownership allow it to prioritize long‑term affordability over short‑term margin protection.
What to watch
Ikea signalled it will keep prioritizing affordability while monitoring tariffs, freight rates, and input costs into 2026. Any easing in trade tensions or logistics prices would relieve pressure on the profit base. Further shocks could force sharper range or price adjustments.
