SWEDEN –    Sweden’s Inter Ikea, the company that supplies furniture to Ikea stores worldwide, reported a 26% drop in annual operating profit due to rising costs driven by U.S. tariffs.

For the fiscal year ending August 31, 2025, operating profit stood at EUR 1.7 billion, down from EUR 2.3 billion a year earlier. Revenue slipped slightly to EUR 26.3 billion from EUR 26.5 billion, as the company reduced prices to attract customers.

Inter Ikea said in a statement that commodity and logistics costs rose in the second half of the year following uncertainties linked to U.S. tariff announcements.

Global retail sales from Ikea stores across 63 markets declined for the second consecutive year to EUR 44.6 billion, as the retailer continued to cut prices to win back shoppers.

While Ikea has lowered prices overall, the company has raised prices on some U.S. products imported from Europe and China to offset the impact of tariffs.

Meanwhile, Lithuanian manufacturer SBA, a key Ikea supplier, opened its first U.S. factory in North Carolina last month. The plant produces popular Ikea items such as BILLY bookcases and KALLAX shelving units. According to Inter Ikea’s CFO Henrik Elm, the facility had been planned before the recent tariff hikes but is now “very timely,” helping mitigate their effects on best-selling products.

Despite lower profits, Inter Ikea said wholesale sales volumes rose by about 6% year-on-year, as consumers responded positively to lower prices.