The largest furniture company in the world, IKEA, closed its Russian locations in March and announced it would downsize its 15,000-strong employment thereby selling factories and offices. However, IKEA declared on Thursday, 13th, October that it will be laying off almost 10,000 of its remaining Russian employees, despite reporting a 6% increase in full-year sales in what it called a "difficult" year owing to inflation and Russian government welfare cuts.
According to Jon Abrahamsson Ring, CEO of Dutch holding company Inter IKEA, the 2022 fiscal year "was a hard year for the world, obviously with all the things going on around us with pandemics but also very steep escalating inflation.''
CEO of Ingka, Jesper Brodin, a holding company that manages most of IKEA’s stores, told AFP that they “had to say goodbye” to around 10,000 staff out of the 12,000 retail employees in IKEA’s Russian stores. IKEA, which had 15,000 employees and 17 stores in Ukraine before the war, was one of the biggest Western employers there before Russia's invasion. Abrahamsson Ring claimed that there had already been a "significant reduction" in staff.
Before the conflict, the Russian market accounted for 4%–5% of the group's sales. In the meantime, it did remark that "sales have grown in dollar terms, but sales volumes have not kept up. Additionally, it was challenging to keep IKEA shelves stocked due to supply chain limitations. Without taking into account currency fluctuations, revenue growth was lower at 3.5%. They had to raise their rates throughout IKEA.
The chief executive noted that supply problems, particularly in Asia, as well as rising raw material prices and the situation in Russia, had hampered operations. IKEA announced an average price hike of 9% in December 2021, as inflation started to emerge. According to Abrahamsson Ring, raising costs was "against our objective, but we were pushed," and even if they did not want to do so, they "can't exclude" doing so.
IKEA, which was established in 1943 in southern Sweden by the late Ingvar Kamprad, is not required to disclose its financial data because it is not listed on any public exchanges. In response to charges of a lack of financial openness and tax planning techniques, the group began releasing incomplete results in 2010. Even in India, it is said, that about a quarter of the chain's 3,000 employees are on part-time roles, working as few as two days a week, and most of these roles are held by students and women to suit their personal requirements, amid early signs of gig work taking shape in the country.
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