IKEA reported a drop in annual sales blaming store closures early in the coronavirus pandemic but said consumers have flocked to its stores since lockdowns lifted to buy desks, chairs and kitchens.
About 75% of the furniture retailer’s stores were closed for between seven to 10 weeks because of coronavirus lockdowns. That resulted in visits to IKEA stores falling nearly 16% for its fiscal year, and lower revenue from its restaurants, which typically make up about 5% of sales.
Overall, Ingka Group—the largest IKEA franchisee and operator—on Tuesday reported sales of €35.2 billion, equivalent to $41.5 billion, for the 12 months to Aug. 31, down from €36.7 billion a year earlier. It didn’t disclose profit figures.
Chief Executive Jesper Brodin said in an interview that consumption trends around the world had been similar through the pandemic. Early on, shoppers bought desks, office chairs and cooking equipment. Interest then moved toward home organization items such as shelving and baskets. Demand for kitchens was also high, with people taking advantage of time at home to install them.
“Lately, we see a lot of interest in beautification,” said Mr. Brodin. “A lot of people are taking the opportunity to update their homes.”
The comments echo those from rival
Home Depot Inc.,
which in August posted its strongest quarterly sales growth in nearly 20 years, saying the home had never been more important to consumers than during the pandemic.
IKEA said online sales grew 60% and now make up 18% of the company’s overall revenue, up from 11% a year ago.
To meet surging online demand, IKEA repurposed its stores to act as fulfillment centers, rolled out click-and-collect at new locations and offered drive-through collection.
It also acquired Geomagical Labs, a startup whose imaging technology allows consumers to decorate and furnish 3-D representations of their homes. In China, IKEA began making its products available on
Alibaba Group Holding Ltd.
’s Tmall online marketplace—the first time they were sold on a third-party online platform.
IKEA said it had benefited from efforts under way before the pandemic to make its products more accessible to people living far away from its stores or who may not have the means to travel to them. Those include opening smaller, city-center stores and investing in improving its online delivery and click-and-collect services. Mr. Brodin said such efforts “suddenly became a survival line” once Covid-19 hit.
However, IKEA ran into trouble in the U.S., where online customers complained of struggling to place, track and receive orders. The company also said it had been caught off guard by level of demand, resulting in some products being temporarily unavailable.
In response, IKEA said it was working to make more products and speed up the time it takes to get these to stores.
Mr. Brodin said he expects people’s focus on their homes to continue, with the company forecasting sales for both Black Friday and Christmas to be stronger than last year.
Write to Saabira Chaudhuri at [email protected]
Corrections & Amplifications
IKEA reported visits to its stores declined nearly 16% for its fiscal year. An earlier version of this article incorrectly said visits had tumbled 19%. (Corrected on Oct. 6)
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