IKEA axes 10,000 jobs in Russia: Company reveals it ‘has to say goodbye’ to huge number of staff after halting operations in the country due to Ukraine
- IKEA closed its 17 stores and halted 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 per cent of the group’s sales
IKEA has axed 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 shops and paused production in the country, where it was one of the largest Western employers before the war with 15,000 employees.
Dutch holding company Inter Ikea’s CEO Jon Abrahamsson Ring said a ‘substantial reduction’ of employees had already been carried out.
IKEA has axed 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, the CEO of Ingka, 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 their Russian stores.
Ingka group has kept its ‘Mega’ shopping malls in Russia open despite the mass closure.
Before the war, the Russian market represented about four to five per cent of the group’s sales.
But they shuttered their stores early in March, just days after Putin ordered his troops over 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 huge setback and the global inflation rise, IKEA posted a six per cent rise in full-year sales.
The 2022 fiscal year ‘was a challenging year for the world, of course with all the things going on around us with pandemics but also very steep increasing inflation,’ Abrahamsson Ring told AFP.
Total sales from the international furniture behemoth’s over 470 shops came in at £38.4billion , for the period September 2021-August 2022, Inter Ikea said in a statement.
A security guard stands outside a shuttered IKEA store after the retailer halted operations in March
But it meanwhile noted that ‘sales have grown in money, but sales quantities have not kept up. In addition, supply chain shortages made it difficult to keep IKEA shelves full.’
Excluding currency effects, revenue growth was lower at 3.5 per cent.
‘We had to increase our prices across the whole of Ikea,’ Abrahamsson Ring said.
The chief executive explained that the operations had been hurt by supply constraints – especially in Asia – plus increased prices for raw materials and the situation in Russia.
In December 2021, as the current wave of inflation began rearing its head, IKEA announced an average increase of nine per cent in its prices.
Raising prices was ‘against our mission, but we were forced,’ Abrahamsson Ring said, adding that while they did not want to raise prices more they ‘can’t exclude it.’
Founded in 1943 in southern Sweden by the late Ingvar Kamprad, IKEA is not listed on any stock exchange and is therefore not obliged to communicate its financial results.
Following accusations of a lack of financial transparency and tax optimisation schemes, the group started publishing partial 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