IKEA Forced To Unpack Its Internal Brand Valuation: $11 Billion

IKEA's standing as one of the world's most valuable brands is a hot topic this week after the company was compelled to disclose its internal brand valuation. The privately held furnishings company has been historically secret about its business metrics — but it finally revealed its internal valuation of its brand because of some changes in corporate structure that came to light.

According to SAPA/AFP, "Swedish furniture giant Ikea said Thursday it had sold its trademark to one of its own subsidiaries for nine billion euros (11 billion dollars), the first time the company has put a book value on the brand. Ikea, which has a complex ownership structure, said its Liechtenstein-based Interogo Foundation had sold the brand name to subsidiary Inter Ikea Systems on January 1, 2012. The transaction was aimed at 'consolidating and simplifying the group's structure,' Inter Ikea Group's head of communications Anders Bylund told AFP."

"Complex ownership structure" is putting it lightly — Ikea's Interogo Foundation only came to light last year following an investigation by Swedish journalists.

Now the company has admitted that its estimated value of its brand, and its iconic blue and yellow logo, is just north of US$11 billion. This was not a revelation, by the way, that the Swedish furniture giant wanted to divulge. "We'll never be as transparent as a listed company," commented spokesman Anders Bylund, according to the Wall Street Journal. He added that "our ambition for years has been to make our business more transparent and easy to understand."

The for-the-record reason for the disclosure of IKEA's internal valuation came about as a result of having to disclose financials during a shuffling of ownership of the brand betweeen different parts of the IKEA empire. Interestingly, the company's founder in 1943, Ingvar Kamprad, at age 86 is still actively involved in running the unlisted, family-owned company and frequently appears on the lists of the world's richest people.

The company that operates the IKEA stores earned $3.67 billion on $31.2 billion in revenue in fiscal year 2011 ending August 31, the Journal said.

There's still plenty of mystery, to be sure, to how IKEA has turned flat-packed furniture into such a powerful brand statement and cash cow. But at least now the world knows something about how it measures its accomplishments.