Everyone's favourite flatpack furniture retailer has seen profits fall by £890 million over the last year, as it uses funds to transform its business.

For the year to 31st August, Ikea's core retailer arm, now called Ingka Group, reported a decline in profit of 40 per cent to £1.3 billion, down from £2.2 billion a year earlier, as reported by Retail Gazette. Sales over the same period continued to rise, increasing by two per cent to £32.9 billion.

But the Swedish retailer isn't concerned by the drop in profits, saying it is all 'part of the plan'. The company said it didn't want customers to pay for its transformation and it was a conscious decision to lower the profits to fund the changes. Ikea says it is in a four-year transformation process and expects profits to be back to normal by 2022.

Ingka is planning job cuts between now and 2022 to keep costs as low as possible, including 350 in the UK and Ireland.

Ikea has been operating with the same business model for 75 years and says it is now investing in a big programme of change, to be ready for the next 75 years.

Punchline said: "We all like to joke about Ikea, but let's be honest, we all love it really. This is a brave move by a global success story which has been going strong for 75 years. We don't doubt that the new plans will see it going strong for another 75."