(qlmbusinessnews.com Tues. 3rd Sept, 2024) London, UK —
Luxury Retailer Harrods Sees Profit Fall Amid £180 Million Payout
The Qatari owners of Harrods have granted themselves a second consecutive dividend payout of £180 million, even though profits at the prestigious Knightsbridge department store fell by 35% amid concerns over a slowdown in the luxury market.
The luxury retailer, owned by the investment arm of Qatar's sovereign wealth fund, reported an 8.2% increase in sales, reaching £1 billion for the year ending 3 February, according to the latest accounts for Harrods Group (Holding) Ltd. The group also oversees a division catering to private jet owners and sells products to international department stores.
Despite the boost in sales, Harrods’ pre-tax profits dropped by £60 million to £111.5 million. This decline was largely due to a £46.2 million writedown on the company’s balance sheet, following a decision by Harrods’ pension fund trustees to purchase an insurance policy from Scottish Widows, which assumed the pension fund's liabilities.
Michael Ward, the managing director and highest-paid director at Harrods, saw his pay decrease to £2.1 million, down from £2.3 million the previous year. However, Harrods expanded its workforce by adding 775 new employees, as the business recovered from the impacts of the Covid-19 pandemic, which had previously restricted international travel and tourism to the UK.
A spokesperson for Harrods commented: “2023 was a year of strong financial performance for Harrods, underlined by sustained growth which reaffirms our leadership in the luxury retail sector.” The company attributed its sales growth to a strategy focusing on “stability and resilience amid a dynamic market,” coupled with substantial investment in both its online presence and its iconic Knightsbridge store, where it unveiled a revamped dining hall and new swimwear and eveningwear sections.
While Harrods has managed to continue its sales growth, many of its competitors, including Harvey Nichols, John Lewis, Fenwick, and House of Fraser, have struggled in recent times. Meanwhile, Debenhams has disappeared from the high street altogether, and Beales has only a few stores remaining, with its Southport branch set to close soon.
Looking ahead to 2024, Harrods signalled a potentially more challenging environment, as several high-end brands, including Burberry, Gucci, and Tiffany, have reported declining demand for luxury items, particularly among aspirational consumers who are increasingly cautious about their spending on occasional indulgences.
The Harrods spokesperson added: “These results reflect a period of substantial growth for the luxury industry in 2023. However, the current economic climate, both in the UK and globally, has created more difficult trading conditions in the luxury sector. Nonetheless, we remain confident in our business's core strengths, the resilience of the luxury market, and our long-term growth and performance goals.”
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