Luxury / news
Harrods returns to profit but remains cautious about future
Harrods returned to profit for the year to late January, posting a pre-tax profit of £84.9 million after a loss the previous year, but the luxury retailer remains cautious about trading conditions.
The Knightsbridge department store's turnaround followed a year that included a £62.5 million charge related to compensation for victims of abuse by former owner Mohammed Al Fayed. Revenue reached almost £1.1 billion, up just 1.2% from the prior year, while operating profit fell to £172.3 million from £177.7 million, reflecting higher employee salaries and distribution costs.
Chief financial officer Geoff Weaver described the results as showing "further stabilisation and modest growth." The company also raised staff salaries by an average of 3% during the period, contributing to the increased cost base.
Harrods has faced headwinds common to London luxury retailers, including higher National Insurance costs and the continued absence of tax-free shopping for international tourists, which has weakened demand from high-spending visitors.
Rival Harvey Nichols is currently up for sale, underscoring the strain on the sector. Despite these challenges, Weaver expressed optimism about the retailer's prospects, though the company remains cautious about the broader economic environment.