LONDON — Harrods is feeling the pinch just like every other retailer — partially thanks to some capital spending at the famed London department store.
This story first appeared in the August 14, 2009 issue of WWD. Subscribe Today.
In a report filed last week at London’s Companies House — the British equivalent of the Securities and Exchange Commission — Harrods reported that net profits fell 19.4 percent to 27.4 million pounds, or $49.5 million, in the year to Jan. 31 from 34 million pounds, or $61.5 million, in the same period last year, partly as a result of exceptional items including a charge of 2.5 million pounds, or $4.5 million, to repair the store’s terra-cotta facade. The company also spent 24 million pounds, or $43 million, on fixtures and fittings during the year, which included refurbishing its homewares area and opening a Champagne bar. The store will complete its 18-month project to renew its men’s wear floors this year.
The retailer reported a 6.2 percent rise in turnover to 464 million pounds, or $839.8 million, in the year to Jan. 31, from 437 million pounds, or $790.9 million, in the previous year. Dollar figures have been converted at average exchange rates for the period.
Harrods called the results “a very strong performance in a year of many uncertainties.” But the company added that “with the volatile economy and trading conditions, the group has continued to adopt a cautious approach to managing costs and conserving liquidity.”
In addition, Mohamed Al Fayed, Harrods’ chairman and owner, did not draw a dividend, in contrast to the previous year when he paid himself a dividend of 50.8 million pounds, or $91.9 million.