Ikea Expects Shortages Due to Supply-Chain Crisis Until Mid-2022
Swedish home-furnishings giant Ikea gave a bleak outlook for the retail industry, saying it expects shortages from the supply-chain crisis to remain an issue through the middle of next year.
“The biggest challenge has been getting products out of China, where there has been a very limited capacity,” Chief Executive Officer Jon Abrahamsson Ring of Inter Ikea, the worldwide franchiser for the brand, said in an interview.
Shortages of transport containers and blocked-up ports have snarled logistics for retailers around the world. The turmoil has led to warnings about slower sales growth and higher costs at companies from Hennes & Mauritz AB to U.K. online retailer Asos Plc. To cope with the situation, Ikea had to prioritize and focus its product offering on the most popular products, Abrahamsson Ring said.
“I don’t think we will be out of the woods” during the current fiscal year, the CEO said. That period runs through next August. “This is a very big challenge for the whole supply infrastructure.”
Inter Ikea had record sales in the past fiscal year, recovering from its first decline in the prior 12 months when the pandemic shut stores. Revenue rose 5.8% to 41.9 billion euros ($48 billion), the company said Thursday. DIY makers have benefited as consumers working from home renovate.
The price spike for transports and raw materials seen in the last six months has meant increased costs, which the company plans to absorb rather than passing over to Ikea customers.
“We want to make Ikea even more affordable,” Abrahamsson Ring said. The company plans to get a bigger share of revenue from lower-price products, he added.
Ikea has also been taking other measures to get products shipped to its stores, such as renting containers itself and finding alternative routes on trains.
©2021 Bloomberg L.P.