Ikea Counts Cost of Brexit as Furniture Import Prices SoarBy
Retailer’s costs jumped 13.7% due to the drop in sterling
Ikea’s U.K. sales increased 5.8% in the year through August
Ikea, the Swedish flat-pack furniture empire, has become one of the few retailers to quantify the financial effects of Brexit.
Costs at Ikea U.K., which is heavily reliant on imports, jumped by 13.7 percent in the year through August, the company said in a statement Tuesday. That increase was driven by the drop in sterling after last year’s vote to leave the European Union.
“To keep our range accessible and affordable for the many, we absorbed most of these costs, increasing prices by just 3.6 percent,” Ikea’s U.K. and Ireland head, Gillian Drakeford, said in the statement.
British retailers such as Tesco Plc and J Sainsbury Plc have been cutting thousands of jobs in response to rising costs but have provided few details. Fashion retailer Next Plc said the pound was worth 14 percent less when it was sourcing garments for this year’s autumn-winter collection. But excess manufacturing capacity enabled the company to strike better deals with suppliers and limit price rises in its shops to 4 percent.
In the U.K., Ikea’s sales rose by 5.8 percent, boosted by two new store openings. Overall, Ikea’s annual retail sales rose 3.6 percent to 34.1 billion euros ($39.8 billion), driven by growth in China, Germany, Canada and Poland.