Filings show IKEA Memphis not maintaining promised employee, wage benchmarks

Filings show IKEA Memphis not maintaining promised employee, wage benchmarks

MEMPHIS, TN (WMC) - Two years after IKEA Memphis opened to much fanfare and millions in tax breaks, new documents show the Swedish furniture retailer doesn’t have as many jobs on the site as they promised. That could prompt EDGE officials to take action on the incentives.

IKEA Memphis opened for business in the Bluff City in December 2016. But last September, the furniture retailer announced it was trimming down its hours of operation. The retailer told us it was exploring a fall/winter hours approach in Memphis tailored to customer needs. IKEA indicated it could reassess in the springtime.

To land IKEA, EDGE approved a PILOT, which amounted to an 11-year tax break worth $9.5 million. It was the first retail company to ever get a PILOT from EDGE. As part of the incentive, IKEA is required to file annual reports. The one just filed raises some concerns.

The company committed to create 175 net new jobs. Documents show IKEA had 195 employees on site at the start of 2017 but it dropped to 175 at the end of the year. IKEA started 2018 with 175 employees but ended with 147.

IKEA also committed to pay $41,011 – not including benefits. And it hasn’t met that figure, paying on average $36,021 in 2017 and $36,944 in 2018.

“We’ve got the IKEA report now and our compliance staff is working with them,” said Reid Dulberger, president and CEO of EDGE, “We will be addressing that in the weeks ahead.”

Dulberger said they’re verifying the numbers submitted. A re-score of the PILOT would be performed with the submitted figures and could shorten the length of the incentive for IKEA.

“If that differs than what we did offer them, we would look to bring the exiting PILOT more in line with what the numbers tell us,” said Dulberger.

WMC Action News 5 reached out to IKEA to inquire about the report.

"IKEA has been working in close partnership with EDGE ever since we opened the store in 2016, " an IKEA spokesperson wrote, “We recently submitted our annual performance report for review and will meet with EDGE to discuss the findings. We look forward to continuing working with EDGE, the City of Memphis, and Shelby County as a proud member of the Memphis business community.”

Late last year, IKEA announced a global reorganization effort aimed at smaller format stores.

The Memphis location will likely be the only one in Tennessee for the foreseeable future. A planned store in the Nashville area was scrapped last May.

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