Ikea Ireland's Profits Plummet 70.5% as Revenue Declines

Accounts filed at the Companies Office show that pre-tax profits at Ikea Ireland Ltd decreased sharply as revenues dipped by 2.4pc from €252.4m to €246.46m in the 12 months to the end of August 2024 against the background of “a slowing home-furnishing market”. The firm’s profits plunged as its overall costs rose by 4pc from €230.71m to €240.07m in fiscal year 2024, which coincided with the company opening its first distribution centre in Ireland at Rathcoole in April 2024, employing over 200 people. The company paid dividends of €20m in 2024 compared with a dividend payout of €11m in the prior year. “In 2024, despite economic challenges and a slowing home furnishing market, Ikea Ireland remained committed to long-term, purpose-driven growth,” the directors state. “Rather than prioritising short-term profits, Ikea focused on increasing affordability, accessibility and sustainability to improve everyday life for more people. “Over €10m was invested in lower prices while significant steps were made to expand access to products and services.” The company said it lowered prices across a third of its product range. “While this investment impacted negatively our FY24 revenue, which decreased by 2.4pc, it was the right thing to do,” the directors state. The accounts show that sale of goods reduced by 3pc from €244.07m to €237m while sales of services increased from €8.3m to €9.4m. “We continued to invest in our co-workers and implemented an increase in base pay for hourly co-workers (+10pc) and salaried co-workers (+5pc)," the directors state. Total administrative expenses increased by 16.3pc compared with the prior financial year, from €56.17m to €70.1m. Overall, the company’s gross margin increased slightly from 30.9pc to 31pc despite the decrease in revenue. “This improvement was driven by better purchasing prices, optimisation of our fulfilment network and cost efficiencies,” they state. “We saw a 4pc rise in furniture click-and-collect orders through stores and mobile pick-up points, off-setting a 4pc decline in truck delivery volumes.” The company said it is continuing to expand in Ireland. “We strongly believe that FY24 formed 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,” the directors state. The business's operating profits decreased by 69pc from €22.44m to €7m. After taking into account net interest payments of €99,682, the firm recorded the pre-tax profit of €6.91m. A dividend received of €1m in the prior year did not re-occur in 2024. The company's gross interest payable bill for 2024 included €28,466 in "penalty interest payable to tax authorities". The firm recorded post-tax profits of €5.43m after incurring a corporation tax charge of €1.47m. Numbers employed by Ikea Ireland increased by 12 from 732 to 744 as staff costs remained at €23.99m. Aggregate pay to directors increased from €271,466 to €342,284. The profits take account of non-cash depreciation costs of €3.06m while operating lease charges declined from €2.86m to €2.38m. Shareholder funds totalled €32.57m that included accumulated profits of €27.57m. Cash funds decreased from €945,957 to €312,834.