IKEA Readies for U.S. Tariff Changes, Says CFO

The world's largest furniture retailer, IKEA, has stated that it is prepared for potential trade barriers that may arise under Donald Trump's presidency. The company's Chief Financial Officer, Henrik Elm, expressed confidence in the resilience of its supply chains to adapt to changes, including tariffs. This statement followed President Trump's threat to impose a 10% tariff on all imports to the U.S. and a 60% tariff on imports from China.

Elm highlighted that IKEA has significantly improved the responsiveness of its supply chain and is now better equipped than ever to address potential trade barriers. However, he also acknowledged that the company is not immune to such changes. This announcement was made in light of Ingka Group, IKEA's largest franchisee, making a significant $2.14 billion investment to expand its presence in the U.S.

IKEA's supply chain in the U.S. relies heavily on imports, with only 10% of the products sold in the region being produced locally. This contrasts with Europe and China, where 70% and 80% of the products sold are sourced from those regions, respectively. Among the top five markets from which the company globally sources products are Poland, China, Italy, Lithuania, and Germany, although no specific distribution was shared.

Despite the challenges posed by potential tariffs, IKEA reported a decline in annual revenue of 8.9%, falling to €26.5 billion. This revenue drop came after the company's decision to lower prices this year. Nevertheless, IKEA experienced an increase in profits, attributed to lower interest payments and customers purchasing more lower-priced products. The financial figures reflect the company's ability to effectively manage its expenses while attracting price-sensitive shoppers.