*

IKEA retail sales fall for second year in a row

*

More stuff for less - volumes rise and store visits are up

*

Furniture giant says US tariffs caused price hikes on some

products

(Updates with comment on US price hikes)

By Greta Rosen Fondahn and Helen Reid

STOCKHOLM/LONDON, Oct 16 (Reuters) - IKEA's annual sales

fell for a second consecutive year, it reported on Thursday, as

the budget furniture retailer stuck to a strategy of cutting

prices to attract cash-strapped consumers and gain market share

in a fiercely competitive market.

Having hiked prices during the pandemic due to supply chain

disruptions, the world's biggest furniture retailer has cut

prices by 10% on average over the past two years as high

inflation and weak housing markets worldwide dented consumers'

demand for furniture and homeware.

Global IKEA retail sales in the 2025 financial year - which

ended on August 31 - fell 1%, or 0.3% adjusted for currency

effects, to 44.6 billion euros ($51.9 billion). The total number

of products sold, however, was up 3%, with customer numbers and

store visits also up.

"One of the reasons we could take that decision was the fact

that we are not on the stock exchange - we can be very long term

together with our franchisees and decide that it's most

important right now to have better prices," Jon Abrahamsson

Ring, CEO of IKEA franchisor Inter IKEA, told Reuters.

"We do that because we see that people in all our 63

markets, their wallets are thinner right now and we see that

consumer confidence for many years has gone down."

In the U.S., however, IKEA has raised prices on some

products due to higher tariffs on imports, though Abrahamsson

Ring said IKEA is trying to absorb the extra cost.

IKEA competes in the U.S. with Wayfair ( W ) and Walmart ( WMT )

, but more of its furniture is made in factories in

Europe, giving it a slight advantage over retailers relying on

imports from China which face a higher tariff rate.

"The agreement that today exists between the European Union

and the U.S. ... that at least gives us good predictability and

we want that to stay consistent," said Abrahamsson Ring.

BIGGEST IKEA RETAILER 'CAUTIOUSLY OPTIMISTIC'

Ingka Group, the biggest IKEA franchisee, which owns stores

in 31 markets, also reported on Thursday its lowest annual sales

since 2021, down 1.6% at 39 billion euros due to price cuts, but

said quantities sold were up 1.6%.

Ingka CEO Jesper Brodin told Reuters he was cautiously

optimistic about consumer spending picking up again.

"The impact of falling inflation and falling interest rates

... it usually takes a while before people open their wallets.

We are starting to see the tendencies towards that," he said,

adding that uncertainty over trade and conflict around the world

made it difficult to predict.

($1 = 0.8596 euros)