IKEA to cut 10,000 jobs in Russia: Company reveals it ‘has to say goodbye’ to large number of staff after halting operations in country due to Ukraine
- IKEA closed its 17 stores and stopped production in Russia in March
- Before the war, it was one of the largest Western employers in the country
- The Russian market represented around four to five percent of the group’s sales
IKEA has cut 10,000 jobs in Russia after halting operations in the country in response to Vladimir Putin’s brutal campaign in Ukraine.
The Swedish furniture giant closed its 17 stores and paused production in the country, where before the war it was one of the largest Western employers with 15,000 employees.
Dutch holding company Inter Ikea’s chief executive Jon Abrahamsson Ring said a ‘substantial reduction’ of staff had already been implemented.
IKEA has cut 10,000 jobs in Russia after halting operations in the country in response to Vladimir Putin’s brutal campaign in Ukraine. Pictured: IKEA in Kotelniki outside Moscow
Jesper Brodin, chief executive of Ingka, a holding company that manages most of IKEA’s stores, told AFP they “had to say goodbye” to around 10,000 employees out of the 12,000 retail staff in its Russian stores.
The Ingka Group has kept its ‘Mega’ shopping centers in Russia open despite the mass closure.
Before the war, the Russian market accounted for around four to five percent of the group’s sales.
But they closed their shops in early March, days after Putin ordered his troops across the border.
Other major Western retailers, including Zara, H&M, Marks & Spencer and Nike, pulled out of the country, along with luxury brands such as Dior, Prada and Gucci.
Despite the major setback and the rise in global inflation, IKEA saw a six percent increase in sales for the full year.
Fiscal year 2022 ‘was a challenging year for the world, of course with all the things going on around us with pandemics, but also very sharply rising inflation,’ Abrahamsson Ring told AFP.
Total sales from the international furniture behemoth’s 470 stores totaled £38.4 billion for the period September 2021-August 2022, Inter Ikea said in a statement.
A security guard stands outside a closed IKEA store after the retailer suspended operations in March
But it noted in the meantime that ‘sales have grown in terms of money, but sales volumes have not kept up. In addition, a lack of supply chain made it difficult to keep IKEA’s shelves stocked.’
Excluding currency effects, revenue growth was lower by 3.5 per cent.
“We had to raise our prices across all of Ikea,” said Abrahamsson Ring.
The CEO explained that operations had been hit by supply constraints – particularly in Asia – plus increased commodity prices and the situation in Russia.
In December 2021, as the current wave of inflation began to rear its head, IKEA announced an average increase of nine percent in its prices.
Raising prices was “against our mission, but we were forced,” Abrahamsson Ring said, adding that while they didn’t want to raise prices more, “they can’t rule it out.”
IKEA, founded in 1943 in southern Sweden by the late Ingvar Kamprad, is not listed on any stock exchange and is therefore not required to communicate its financial results.
Following accusations of lack of financial transparency and tax optimization schemes, the group began publishing interim results in 2010.
Companies that stopped doing business in Russia
- Taco Bell
- Pizza Hut
- British American Tobacco
- Canada Goose
- TJ Max
- Exxon Mobil
- Delta Air Lines
- United Airlines
- Hilton hotels
- Hyatt hotels
- American Airlines
- Walt Disney
- Warner Brothers
- Imperial Brands