To Sell Four Factories, Close Two Offices And Lay Off Workers: IKEA Washes Its Product Warehouse For Customers And Employees

Illustration of IKEA in Russia. (Wikimedia Commons/Vmenkov)

JAKARTA - IKEA, a Swedish furniture and home furnishings chain, announced plans to sell factories, close offices and reduce its 15,000 workforce, including selling products in warehouses to customers and employees.

Wednesday's announcement is the latest move by the world's biggest furniture brand to halt operations in Russia following Moscow's invasion of Ukraine.

The move comes after IKEA temporarily closed stores and halted procurement in Russia, joining a mass corporate exodus, as Western firms scramble to comply with Western sanctions and amid Kremlin threats to seize foreign assets.

However, the Swedish company continues to pay employees and will do so until the end of August.

On Wednesday, IKEA said it saw no possibility of resuming sales in the country, where it opened its first store in 2000, in the future.

As a result, Inter brand owner IKEA, which is also in charge of supply, said it would now start looking for buyers for its four factories, permanently closing two purchasing and logistics offices in Moscow and Minsk, and cutting staff.

IKEA is known to have around 15,000 employees in the country so far, 12,500 of whom work in the Ingka Group which owns all the IKEA stores in Russia.

"Unfortunately, the situation has not improved, and the devastating war continues. Businesses and supply chains around the world have been heavily impacted and we do not see the possibility of resuming operations in the near future," Ingka Group said in a statement.

Even so, Ingka, who is also one of the owners of the world's largest shopping malls, has still opened 14 malls in Russia under the 'MEGA' brand.

The company said it wanted to ensure people had access to basic necessities, including clothing, groceries and pharmacies, but was continuing to evaluate the situation.

Ingka also declined to comment on his plans for the 17 closed shops, saying in an email that they were "exploring various options".

The move so far stands in contrast to several other big Western companies, such as McDonald's and French carmaker Renault, which have sold their assets to local buyers and exited the country entirely.

Retail business remains suspended, IKEA said, but hinted it could open doors for Russia one last time.

"To ensure the necessary business processes, we are organizing the sale of household goods in our warehouses to employees and customers. The date will be announced soon," said IKEA.

It said it was possible to donate some shares to people in need. But selling surplus inventory and generating income there can be puzzling given the public and political pressure on companies not to make money doing business in Russia.

"We considered various options before making the decision to sell the shares, and no other solution was viable," the company said in an email.