SHELBY CO., Tenn. - IKEA’s financial future looks to be on shaky ground here in the Mid-South.
The Swedish furniture company asked for changes to its original deal for tax breaks.
In 2015, IKEA promised to create 175 full-time jobs with an average pay of $41,000 in exchange for a tax break with Shelby County.
But this past January, the company failed to meet its performance goals with the EDGE Board for 2018, only employing 147 workers making less than $37,000. The Mid-South location was also the first to cut store hours.
IKEA voluntarily asked EDGE to reduce its PILOT term by two years and adjust its goal requirements for jobs and salaries.
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Now the company must maintain a total of 125 jobs with an average salary of $34,000.
FOX13 asked the EDGE board what this means for the company’s future in Memphis and if there was any concern the company might leave.
EGDG Board President and CEO Reid Dulberger said he isn’t worried about IKEA leaving the Mid-South.
“I think IKEA really wants to be here, but we understand there’s been a tremendous change in brick and mortar retail around the nation,” he said.
Some of these changes include IKEA pulling its plans to open a second Tennessee store in Nashville last year.
“We also know that their new construction around the country has slowed but they seem committed to making the Memphis store work,” said Dulberger.
An IKEA spokesperson said the adjusted PILOT terms will help the company more accurately match its staffing in Memphis.
“We appreciate the ongoing support and dialogue with EDGE, and we believe we will come to a fair agreement. We are very proud to be a member of the local business community in the City of Memphis and Shelby County and remain committed to contributing to the economic growth of the region,” said an IKEA spokesperson.
When FOX13 asked IKEA if it had plans of leaving the Mid-South, the spokesperson didn’t answer our question directly.
“Our traditional stores will continue to be a vital part of the IKEA experience, and we will continue to invest in existing and new stores while we keep a strong focus on developing our digital capabilities and our fulfilment network,” said an IKEA spokesperson.
If IKEA’s performance levels continue to drop then EDGE Board can shorten the terms of its PILOT even more. With a short PILOT, IKEA would be responsible for paying full property taxes sooner than later.
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