The global furniture retailer recorded its third consecutive year of declining sales, with weaker demand in China and the Middle East offsetting growth in Europe and Latin America.
Inter IKEA Group, the owner of the IKEA brand and worldwide franchisor, reported a 7% decline in net profit to €1.4 billion for FY26, as its strategy of making products more affordable continued to put pressure on financial performance. Revenue fell 2% to €25.9 billion for the financial year ended August 31, 2026, compared with €26.3 billion in FY25. Operating profit also declined to €1.5 billion from €1.7 billion.
Across its global retail network, IKEA generated €43.8 billion in sales, down from €44.6 billion in the previous financial year. This marked the third consecutive annual decline in retail sales, with weaker trading in China and the Middle East outweighing growth across Europe and Latin America.
To revive demand, IKEA has joined hands with its European franchisees to invest approximately €1.2 billion in price reductions, effective September 1, 2026. The initiative covers more than 1,000 products, with selected items seeing price cuts of up to 25% across more than 20 European countries. Products including the popular Billy bookcase and Kallax storage range are among those benefiting from the reductions.
Inter IKEA CEO Jakub Jankowski said the company needed to return to growth after several years of stagnant sales. The group has maintained its focus on affordability, product development and improving the customer experience despite continued pressure from transportation, raw material and operating costs.
The company’s franchise model remains central to its global operations. Inter IKEA Systems B.V. owns the IKEA Concept and acts as the worldwide franchisor, granting companies the rights to operate IKEA retail businesses in designated territories. Currently, 13 franchisee groups operate IKEA sales channels across 64 markets.
Under the franchise arrangement, operators pay a franchise fee equivalent to 3% of their net sales for the right to use the IKEA brand, concept, product range and operating systems. Inter IKEA generates revenue primarily through product sales to franchisees and franchise fees.
Global retail operations are not limited to large-format stores. IKEA is increasingly expanding through smaller city-centre outlets, plan-and-order points and digital channels to reach customers closer to where they live. During FY26, the network expanded into New Zealand, while the company also opened smaller-format locations in existing markets. At the same time, IKEA discontinued operations at seven stores in China amid challenging market conditions.
The group also introduced 2,900 new and updated products during FY26 and undertook organisational restructuring, including a reduction of approximately 850 positions, as it sought to simplify operations and improve efficiency.
Looking ahead, IKEA plans to continue investing in affordability and accessibility as it attempts to reverse declining sales. The challenge will be to translate lower prices into higher sales volumes while protecting profitability across its extensive international franchise network.
