IKEA is one of the world's leading furniture merchants, and it distinguishes itself from competitors by providing a diverse selection of items at a range of price points.
The business focuses on high-end items for outfitting the house at a price point that clients can readily afford.
IKEA has locations worldwide, but you may want to check to see whether the stock is presently trading and if the company has any ambitions to go public. This article will teach you all you need to know about IKEA.
Is it necessary for us to explain this one to you guys? For those unfamiliar, Ikea is a global business headquartered in Sweden that creates and sells ready-to-assemble home furniture. You've probably seen or used an Ikea shelf or table at some point in your life. If you're extremely fortunate, you may be able to construct one of them with your own two hands.
Ikea is a world-renowned brand with operations in Europe, North America, Asia, North Africa, and Oceania. Ikea's dominance is quite astounding. In the fiscal year 2020, the firm claimed worldwide sales of over 40 billion euros during the COVID-19 pandemic.
This was really a decrease from the fiscal year 2019 owing to massive retail closures in pandemic-affected areas, which would make for an excellent investment in IKEA stock.
IKEA presently has 378 stores in 30 countries on practically every continent. Additionally, the brand is a business leader in eCommerce, attracting billions of visits each year. They're a serious rival to Amazon, Wayfair, and Overstock.com in the home goods space.
With Sweden's famous blue and yellow national colors, few corporate logos in the world can elicit the same emotion from people, regardless of where they reside. Who doesn't like a trip to IKEA? That is a serious inquiry. It's really a joy to visit this business.
What Makes IKEA So Valuable?
This business has grown to be one of the most valuable furniture brands in the whole industry as a result of its dedication to innovation and design.
By investing regularly in research and development, this business maintains its pricing low, establishing itself as the go-to source for those in the market for new furniture.
Additionally, the firm has gained value as a result of its website users. Their approach to furniture purchasing, which incorporates both a physical presence and an e-commerce platform, has benefited customers globally.
What Is INGKA?
INGKA was formed in 1982 by Ingvar Kamprad, the same person who started IKEA in 1943. The INGKA Foundation primarily serves to ensure that the IKEA corporation remains closely controlled by the company.
Additionally, a significant portion of the INGKA supervisory board is composed of members of Ingvar Kamprad's family.
Additionally, the INGKA group employs a critical and beneficial anti-takeover defense strategy that safeguards the firm from being acquired by a bigger corporation, either forcefully or freely.
Who is Ingvar Kamprad?
Ingvar Kamprad founded Swedish retailing behemoth IKEA, one of the world's most recognizable companies renowned for its beautiful, practical, and inexpensive furnishings. At the age of 17, Kamprad launched IKEA as a direct import and mail order business.
In 1948, Kamprad started selling furniture, and in 1950, he debuted the IKEA catalog. In 1953, IKEA introduced flat-pack, self-assembly furniture—a breakthrough that reduced prices and damage rates and streamlined delivery systems, resulting in a business boom.
IKEA announced retail sales of 39.6 billion euros for the fiscal year 2020, down slightly from 41.3 billion euros the previous year. It has grown to over 500 sales sites globally, employing 217,000 people.
Kamprad died on January 27, 2018, at the age of 91, at his home in Sweden. As of March 2015, Forbes projected that Kamprad and his family were worth $3.5 billion.
Kamprad was a very thrifty guy with an astute business sense. One of his most foresighted initiatives was to structure IKEA as a controlling trust that owns and operates diverse business operations via holding companies. While IKEA does allow franchising, the trust manages the majority of its business directly, including its production and distribution operations. IKEA discloses basic financial information on a voluntary basis, including the number of stores and total sales.
Investors have long wished for IKEA to go public. Despite the founder's death, Kamprad's sons continue to run the business and have given no indication that they would ever pursue an IPO.
Does IKEA Make Money?
IKEA is a profitable corporation, with annual sales of €39.6 billion ($48.04 billion) in 2020.
IKEA's yearly revenue decreased from €41.3 billion ($50.10 billion) in 2019 to €41.3 billion ($50.10 billion) in 2020 as a result of COVID-19. IKEA is a rapidly expanding corporation; its yearly sales increased to €23.5 billion ($28.51 billion) in 2011 from €23.5 billion ($28.51 billion) in 2010.
While IKEA's sales have increased, its profitability has decreased in recent years. IKEA's yearly net income, according to Statista, peaked at €4.2 billion ($5.10 billion) in 2016. In 2020, the company's yearly net income would fall to €1.189 billion ($1.44 billion).
IKEA is a well-known corporation. According to Statista, IKEA's website IKEA.com will attract four billion visits in 2020. IKEA is, nevertheless, a little participant in the American business. According to Statista, IKEA accounted for less than 2% of the online furniture industry in the United States.
As a result, IKEA occupies a specialized niche in the U.S. furniture and home products industry. In America, IKEA is seen as a farce, more renowned for its Swedish meatballs than for its furnishings. Notably, IKEA is often criticized in American media and is a favorite target of American comedians and comedy writers.
The simple answer is that it is not. IKEA already has a lot of money and hence does not offer the additional expenditure and problems that selling shares would entail. Companies that do so must adhere to a set of guidelines.
These guidelines include matters such as maintaining an investor relations department, dealing with the financial press, and complying with regulatory requirements. The stock market is carefully regulated to avoid situations similar to those shown in the 1980s film Trading Places.
IKEA is a privately held enterprise, and a trusteeship administers it with a board of directors based in Delft, Holland. The company's founder was opposed to the concept of selling the business, and the trustees concurred.
IKEA does not need further brand awareness. It is a global phenomenon and an internationally known brand. It does not need liquidity; it already has plenty. Indeed, given the trusteeship, it would be very difficult to convert it to a publicly listed corporation.
IKEA does not have a stock ticker since the Iterogo foundation privately controls the company. The foundation's mission is to ensure that the IKEA business and vision endure in perpetuity, free from external intervention. As a result, IKEA has never been listed on a stock market and hence lacks a ticker symbol.
IKEA's stock price is not publicly known due to the company's shares not being listed on any stock market. There is no market value for IKEA stock since the firm is held by a private foundation founded by Ingvar Kamprad to preserve the IKEA concept's history.
IKEA's business strategy is complicated by the fact that two entities own it: INGKA Holding B.V. and the Interogo Foundation. UNDER THE PRESENT OWNERSHIP SCHEME, the IKEA Group is a franchisee that pays 3% royalties to Inter IKEA Systems, also known as INGKA Holding B.V. The official name of the firm that franchises IKEA is Inter IKEA Systems.
The IKEA Group, which INGKA Holding B.V. owns, runs the stores under the present business model. Inter IKEA Systems or Inter IKEA Holding B.V., on the other hand, owns the IKEA Concept and provides the furniture seen in IKEA stores.
The Interogo Foundation ultimately holds the IKEA Group and Inter IKEA Holding B.V., a self-owned investment corporation domiciled in Liechtenstein. Inter IKEA Holding B.V. licenses the IKEA brand and goods to a number of companies worldwide. Inter IKEA Systems B.V.IKEA of Sweden AB, IKEA Supply AG, and IKEA Communications AB are among these companies.
Will IKEA Ever Become Public?
At this moment, it is quite improbable. IKEA is a wholly private corporation, with all shares and stocks controlled by the INGKA Foundation, which is composed of family members and other foundation officials.
Additionally, IKEA is adamantly opposed to the firm being acquired by bigger companies or other larger overseers. As a result, the INGVAR Foundation has created an anti-takeover protection plan to avert such a scenario.
What are the advantages of an initial public offering (IPO) of Ikea stock?
There are some significant advantages to being a publicly listed corporation, as Ikea is not. A significant advantage is the capacity to generate funds via the sale of stocks and bonds. This provides firms with the capital they need to grow their companies, recruit more staff, and make other investments.
Additionally, public companies are subject to a higher level of regulation, which protects investors. Finally, having a publicly traded firm lends a business more credibility and may aid in the development of ties with other companies.
There are a few significant disadvantages to being a publicly listed corporation. A significant disadvantage is that public companies are compelled to reveal financial information, which may be detrimental if the business is doing badly.
Another disadvantage of public companies is that they are more susceptible to litigation and activist investors. Finally, going public may be costly and time-consuming, diverting management's focus away from the business's day-to-day operations.
Top IKEA Competitors to invest in
Because IKEA is not a publicly listed business, its rivals are appealing investments for exchange investors.
Walmart sells a large array of high-quality and reasonably priced items. The company's headquarters are in San Francisco, where it was founded in 2000.
It is made up of Walmart.com and Walmart Stores Inc., which sell a diverse range of products in a variety of areas. One of them is furniture, which is why they are a direct rival of IKEA.
Walmart Furniture has a diverse selection of home furnishings, including office furniture, bedroom furniture, kitchen furniture, living room furniture, and even children's furniture and beds.
As with IKEA, Walmart's furniture is adaptable to any household. Given Walmart's prominence as one of the world's largest retailers, it's reasonable to assume the firm is a major IKEA rival.
2. Wayfair Inc. (NYSE: W)
Wayfair (W), American furniture and the home-goods retailer, was the seventh most popular e-commerce website in the United States in 2020, with 77.7 million visitors.
According to Statista, Wayfair will have around 20 million active consumers by 2020. Between the third quarter of 2019 to the third quarter of 2020, Digital Commence 360 believes that Wayfair's revenues increased by 65.5 percent.
According to Digital Commerce 360, the number of active Wayfair consumers increased by 50.9 percent between the third quarter of 2019 and the third quarter of 2020.
Interestingly, Digital Commerce 360 forecasts Wayfair's active customer base to be 28.8 million in the third quarter of 2020. This figure exceeds Statista's expectations.
Wayfair maintains a high level of consumer loyalty. According to Digital Commerce 360, repeat consumers purchased 11.3 million items at Wayfair in the third quarter of 2020. During the third quarter of 2020, repeat customers accounted for 71.9 percent of Wayfair's orders. In the third quarter of 2020, Digital Commerce 360 expects that the typical Wayfair order will be worth $243.
3. TJX Companies Inc. (NYSE: TJX)
The TJX Companies (TJX) is a direct rival of IKEA. TJX competes with IKEA in the United States by running the HomeGoods, Sierra, and Homesense furnishing stores.
TJX is a retailer with approximately 4,500 stores in nine countries. Homegoods, T.J. Maxx, Sierra, Winners, Homesense, Marshalls, and T.K. Maxx is among the TJX retail brands.
TJX, like IKEA, operates on a unique business strategy based on substantial discounts on high-quality items. In contrast to IKEA, TJX sells apparel, including a variety of fashionable products. However, some TJX stores sell directly with IKEA by selling furniture and home items.
Many Americans buy at TJX stores because they offer a variety of unique and odd things, as well as name-brand clothes, at affordable costs. TJX is able to offer such low prices because it obtains products directly from more than 21,000 merchants in more than 100 countries. In contrast to many other American stores, TJX focuses on the working-class market and urban customers.
TJX has the potential to make tremendous sums of money from its business. On October 31, 2020, The TJX Companies announced a quarterly gross profit of $3.055 billion and a quarterly operating profit of $1.069 billion.
4. Amazon
Amazon was founded in 1994 by Jeff Bezos and is today a leading e-commerce corporation headquartered in Seattle, Washington. The firm operates on a cloud-based technology platform and has grown to become the world's biggest retailer. They sell not only a diverse selection of items but also offer a variety of services over the Internet.
Amazon began by selling books, followed by films and television series. Later on, they expanded their offerings to include the sale of a variety of things, including furniture. They distribute furniture via Amazon Home and offer a diverse selection of furniture like IKEA.
Amazon Home sells a variety of different types of furniture, including bedroom furniture, dining room furniture, kitchen furniture, and outdoor furniture.
5. Lowe's Companies Inc. (NYSE: LOW)
Lowe's (LOW) is one of two colossal companies that dominate the North American home improvement and hardware sector. Lowe's and Home Depot (NYSE: H.D.) both run massive home improvement facilities. At a Lowe's shop, Americans and Canadians may buy everything from nails to washing machines. Lowe's is an indirect rival of IKEA due to the fact that it sells a wide variety of home goods.
Lowe's operated 1,977 stores in 2019, according to Statista. Lowe's store count reached a record high of 2,152 in 2017. Lowe's location count has decreased in recent years as the corporation has closed smaller hardware stores.
Lowe's earns money from hardware and home goods. On October 31, 2020, the firm reported a quarterly gross profit of $7.3 billion, a quarterly operating profit of $2.175 billion, and quarterly sales of $22.309 billion.
Lowe's earned more money in 2020 amid the COVID-19 epidemic. Its quarterly sales increased from $16.027 billion in January 2020 to $16.027 billion in February 2020. Quarterly gross profit increased to $4.982 billion on January 31, 2020, from $4.982 billion on January 31, 2019. Quarterly operating income increased to $958 million in January 2020 from $958 million in January 2019.
Lowe's sales are increasing rapidly. According to a Stock Rover study, Lowe's sales increased by 28.3 percent in the quarter ending October 31, 2020. Revenue growth increased to 30% on July 31, 2020, 10.9 percent on April 30, 2020, and 2.44 percent on January 31, 2020.
Conclusion
IKEA is a worldwide firm that has developed a strong brand loyalty among consumers by concentrating on the production of high-quality, reasonably priced products. IKEA stock is not available for purchase, and the firm lacks a stock symbol. At the moment, there are no plans for an IKEA initial public offering (IPO) since the business is governed by a foundation that will ensure the company's future independence.
Finally, established retailers such as Lowe's and TJX Companies are likely to provide a greater return on investment than IKEA. Investors do not need IKEA stock since other excellent alternatives are available.
FAQs
Is it possible to invest in stock in IKEA?
You're probably considering making an investment in IKEA, your preferred furniture retailer. IKEA equities are not yet listed on the Stock Exchange since the furniture behemoth is a privately owned firm, and this effectively locks up the whole IKEA stock.
Why isn't IKEA a public company?
It is not publicly traded. "IKEA's complex organizational structure precludes the business from becoming public. The majority of activities, including shop management, design, and manufacturing of furniture, are managed by a trust called INGKA Holding, which is located in Delft, Holland.
Is IKEA manufactured in China?
While the majority of IKEA items are created in Sweden, the majority of production occurs in China and emerging economies such as Vietnam, Malaysia, Myanmar, and Eastern European nations such as Romania and Poland.
Real-time News
