3 Mar 2022 14:32

IKEA pauses operations in Russia and Belarus

MOSCOW. March 3 (Interfax) - IKEA has decided to pause all retail operations in Russia as well as operations in Belarus, the Swedish furniture giant said in a letter to employees, seen by Interfax, and in an official statement.

Inter IKEA Group has taken the decision to pause all export and import in and out of Russia and Belarus, to pause all IKEA Industry production operations in Russia and to pause all IKEA Retail operations in Russia.

A source with knowledge of the situation told Interfax that sales would be paused and stores shut from March 4.

The MEGA shopping centers will continue to be open.

"The devastating war in Ukraine is a human tragedy and our deepest empathy and concerns are with the millions of people impacted. The immediate actions of Inter IKEA Group and Ingka Group have been to support the personal safety and security of IKEA co-workers and their families, and we will continue to do so," IKEA said in the statement.

"These decisions have a direct impact on 15,000 IKEA co-workers. The ambitions of the company groups are long term and we have secured employment and income stability for the immediate future and provide support to them and their families in the region," it said.

IKEA said in the letter to employees that even amid the current uncertainty, it can guarantee employees certain conditions for at least the next three months - preservation of jobs and full payment of salaries, and preservation of the basic package of benefits. The company does not plan to terminate temporary contracts before they expire.

"The suspension of sales does not mean the complete stoppage of the company's activities," the letter says. IKEA plans to support work processes that can ensure business continuity in the future.

IKEA Foundation, funded by Ingka Foundation, announced an immediate donation of 20 million euros for humanitarian assistance to those who have been forcibly displaced as a result of the conflict in Ukraine. This is in response to an emergency appeal from UNHCR, the UN Refugee Agency, to scale up its assistance and protection to people affected by the conflict in Ukraine.

In addition, Inter IKEA Group and Ingka Group are initially granting 10 million euros each to provide support in products and other assistance to UNHCR, Save the Children and other organizations working in the local markets.

"The situation is extremely critical and fast moving. The company groups are dedicated to navigate in this reality with the best interests of people as the highest priority," IKEA said.

IKEA currently has 14 stores in the Mega shopping centers in Russia, three of the new IKEA City stores in Moscow, as well as several design studios. The company, according to its website, has four factories in Russia: in Yesipovo in the Moscow region, Tikhvin in the Leningrad region, in Veliky Novgorod and in Krasnaya Polyana in the Kirov region.

IKEA boosted sales in Russia 31% in the financial year ended August 2021. It did not say what the revenue was.

According to data in the SPARK-Interfax analytical system, revenue of Ikea Dom LLC, which manages IKEA's stores in Russia, increased 6.7% to 123.1 billion rubles to Russian Accounting Standards (RAS) in the 2020 calendar year.