IKEAC has decided to sell a large portion of its furniture consignments in a bid to avoid a prolonged bout of global financial chaos, which has seen the retailer lose almost $600 million in revenue over the past year.
According to the company’s financial statements, IKEa’s furniture sales were €6.5 billion in the year ending in March 2018.
The company said in its quarterly report last week that its overall sales fell by 10% in the first quarter of 2018 due to the global financial crisis, as well as from the sale of its iconic IKEAM brand to the Swedish furniture brand Nyköping.
The furniture company said the sales in 2018 will have increased by 20% over 2017, but it will still have to pay out a loss of €6 million in 2019.
The IKEac’s new sales figures are only part of a continuing problem.
In the last few years, IISCO, which manages the IKEas furniture and other goods consignment portfolio, has not had the funds to maintain the IISco network of warehouses and sales centres, according to a statement from the company.
The losses incurred in 2019 will not only be borne by IISCo but by the IESO as well, it added.
The move to sell its furniture portfolio is in line with a long-term strategy IKEAc has developed for the company, in which it aims to improve the value of its goods through a number of channels.
Last year, ILEI, which represents IKEAs furniture and goods consigns, announced it would sell its IKEAS products, including furniture, in an auction of its own.
The company also has its own sales department, which aims to raise funds to ensure the continued operation of its Ikeas retail and warehousing network.
The decision to sell is a significant blow to the struggling retailer.IKEA has a long history of dealing in its furniture and accessories, with sales at its stores in Paris, Paris and Milan, and the Paris and Munich branches, accounting for 70% of its total sales.
But this was not the case with the launch of the Swedish company’s furniture brand, which started in the 1970s and is now part of IKE A/S, and which the company has tried to revive as a new business model.
In addition to its current global sales, the company sold its Swedish IKEABlogo, the brand’s online store, in February 2019, a move which was not welcomed by some customers.
In October, the Swedish government announced it was freezing the countrys property tax and selling the Ikeablogo brand to a private equity fund.
The Swedish company had been seeking to sell some of its other brands, such as the furniture, accessories and kitchenware, as part of its efforts to rebrand its portfolio.