Ikea shuts Russian stores and warns of price rises amid cost and supply chaos

Russia is Ikea's 10th largest market, contributing annual retail sales of €1.6bn - 4% of the group's total.

Ikea, the world's biggest furniture brand, is closing its stores in Russia and pausing all sourcing in the country and ally Belarus, joining the wave of Western firms curbing business with Russia after its invasion of Ukraine.

The news came as Ikea store owner Ingka Group's retail manager said the budget furniture-maker now expects to raise prices by an average of 12% this fiscal year, up from 9% flagged previously amid soaring raw material costs and supply chain disruptions.

"The devastating war in Ukraine is a human tragedy, and our deepest empathy and concerns are with the millions of people impacted," brand owner Inter Ikea and Ingka Group said in a joint statement.

"The war has both a huge human impact and is resulting in serious disruptions to supply chain and trading conditions, which is why the company groups have decided to temporarily pause Ikea operations in Russia," they said.

Ingka Group, which is also one of the world's biggest shopping centre owners, said its 14 malls in Russia, branded "Mega", remain open.

While a raft of international companies have already halted operations in Russia due to the war and consequent sanctions against the country, Ikea is one of the first to also halt business with Belarus.

"We couldn't offer safety and security of people working in our supply chain - passing the border et cetera was simply too risky. Then, on top of that, the consequences of different sanctions altogether made it simply not possible to operate any longer," Inter Ikea core business supply manager Henrik Elm said regarding Belarus.

Inter Ikea is in charge of supply while Ingka Group is the main global retailer with 17 stores in Russia and one distribution centre. In the year through last August, Russia was Ikea's 10th-biggest market with retail sales of €1.6bn, or 4% of total retail sales.

-Reuters