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Ikea counts cost of Brexit as furniture import prices soar
[LONDON] Ikea, the Swedish flat-pack furniture empire, has become one of the few retailers to quantify the financial effects of Brexit.
Costs at Ikea UK, which is heavily reliant on imports, jumped by 13.7 per cent in the year through August, the company said in a statement Tuesday. That increase was driven by the drop in sterling after last year's vote to leave the European Union.
"To keep our range accessible and affordable for the many, we absorbed most of these costs, increasing prices by just 3.6 per cent," Ikea's UK and Ireland head, Gillian Drakeford, said in the statement.
British retailers such as Tesco Plc and J Sainsbury Plc have been cutting thousands of jobs in response to rising costs but have provided few details. Fashion retailer Next Plc said the pound was worth 14 per cent less when it was sourcing garments for this year's autumn-winter collection.
But excess manufacturing capacity enabled the company to strike better deals with suppliers and limit price rises in its shops to 4 per cent.
In the UK, Ikea's sales rose by 5.8 per cent, boosted by two new store openings. Overall, Ikea's annual retail sales rose 3.6 per cent to 34.1 billion euros (S$54.2 billion), driven by growth in China, Germany, Canada and Poland.