Ikea UK loses £33m after closing stores for nearly three months

Ikea’s UK business dived nearly £33m into the red last year after it was forced to close stores for nearly three months during the pandemic.

The world’s largest furniture retailer said UK sales fell more than 10% to £1.9bn in the year to 31 August, even though online sales increased by nearly a third.

Ikea admitted that it had struggled to meet demand for home deliveries despite turning stores into distribution centres for online orders during the high street lockdowns.

Peter Jelkeby, the UK and Ireland country retail manager for Ikea, said pretax losses had widened to nearly £33m from £2.5m in 2019 because the group had been forced to close stores for three months and invest in infrastructure to make home deliveries.

“We had a good performance before lockdown and I am proud of how resilient we have been,” he said.

The drop in sales came despite a strong year for the home furnishings and DIY industry as families rejigged their flats and houses to accommodate schooling and working from home.

Sales of wall art doubled and searches for small desks on Ikea’s website quadrupled as the UK prepared for video conferencing from home.

Jelkeby said the chain had fast-tracked the introduction of click and collect at all stores and click and deliver to DPD drop-off points “in a year when life at home was never more important”.

He said Ikea had paid its workers 100% of their salary throughout the lockdowns with some store staff retraining to process online orders. However, the group has frozen pay for staff until September, meaning it did not increase wages for the lowest paid in line with the living wage last month, despite being accredited to the independently verified pay measure for several years. The company said its accreditation had been “paused”.

Jelkeby said Ikea was investing in stores to make them more appealing when they reopen in April, and would add an outlet in Hammersmith, west London, this autumn.

He said Ikea remained “committed to investing in locations that make Ikea more accessible” after closing one full-range store in Coventry and two trial small stores in London.

On Wednesday, the US owner of homewares and fashion retailer TK Maxx reported that its international business, led by the 400-strong UK chain, had dived to a $504m (£357m) loss in the year to 30 January from a $307m profit a year before.

TJX Companies said sales at its international business, which also includes stores in Australia, Austria, Germany, Ireland and Poland, slid by a third to $3.8bn after it was forced to close stores for months.