Brexit 'challenge' pushes up IKEA's UK costs by 13%

IKEA Gillian DrakefordIKEAIKEA UK CEO Gillian Drakeford.
  • IKEA UK’s revenue up 5.8% to £1.8 billion in 2017.
  • Costs up 13% due to Brexit-driven collapse in the pound.
  • UK CEO says IKEA will “continue to invest” in the UK.

LONDON — Brexit pushed up IKEA’s UK costs by 13% last year, the furniture giant has said.

IKEA UK’s annual results, released on Tuesday, show a big jump in costs due to the declining value of the pound after Britain’s vote to leave the European Union in June 2016. The pound fell to a 31-year-low against the dollar the day after the referendum and a later dropped to a 7-year low against the euro.

CEO Gillian Drakeford said in a statement: “The Brexit vote has been on everyone’s lips and the devaluation of the Pound has been a challenge for many businesses.

“As we import a lot of our products from overseas, this increased our costs by 13.7%. To keep our range accessible and affordable for the many, we absorbed most of these costs, increasing prices by just 3.6%.”

IKEA Sheffield opening day (2) LR(3)IKEAThe opening of IKEA’s latest store in Sheffield.

Drakeford said IKEA will “continue to invest” in the UK and has a “bold and positive” vision to “increase our share of the UK home furnishing market by 2027, to 15%.”

“It won’t be easy, but we’re determined to bring our offer closer to more people,” Drakeford said.

Drakeford told Business Insider about her plans to adapt IKEA to changing consumer habits in an interview last month.

IKEA UK’s annual results show sales up 5.8% to £1.81 billion in the year to August 31, 2017. The best performing products were comfy chairs and sofas, where sales were up 11%, and kitchen utensils, which saw a 10% rise in sales. Online sales rose by 10%. IKEA UK declined to disclose its profits figures.

Drakeford said in a statement: “Despite a level of economic uncertainty, our brand is even more relevant and we

continue our efforts to bring affordable well-designed home furnishing solutions to the UK.”

The results represent the sixth consecutive year of growth for IKEA in the UK. The Swedish retailer, which celebrated its 30th anniversary in the UK this year, had 57.2 million visits to its 20 stores across the UK last year and 175.8 million visits to its website.

Companies House filings on Monday show IKEA UK’s auditors recently resigned. IKEA UK said in a statement to Business Insider: “We can confirm that IKEA Limited (IKEA UK) has appointed Ernst and Young as our new auditing partner, the same partner used by INGKA Group.”

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