SHIFTING TO EAST: As waves of lockdowns send London retailers into the abyss, while Chinese luxury retailers benefit greatly from pent-up demand, SKP Beijing is said to have surpassed Harrods’ pre-pandemic performance for the first time in sales last year, racking up over 17.7 billion renminbi, or 2 billion pounds at current exchange, up 17 percent year-over-year.
Over 15 million people visited the store in 2020, and many brands’ best-performing point of sales worldwide are in this mall, one of its real estate partners, Huamao Group, told the local press.
Chao Fang, president of Huamao Group, said SKP’s consistent success comes from the ecosystem that the group has built in the China Central Place area, which covers an area of 15 hectares, hosting three premium office towers, two five-star hotels and a block of luxury apartments, on top of SKP Beijing and its experimental offering SKP-S.
In 2019, SKP Beijing was ranked below Harrods as the second-most productive store worldwide in a report by GlobalData and the architecture firm Sybarite.
In the 12 months to Feb. 1, 2020, the Qatar Holding-owned Harrods saw a 4 percent uptick in gross transactional value, which includes sales of own-bought merchandise and through concessions, to 2.2 billion pounds.
Turnover in the period was broadly flat, edging up 0.3 percent to 870.8 million pounds, and post-tax profit rose 11.6 percent to 191.4 million pounds. Operating profit was up 0.6 percent to 203.3 million pounds.
With tourism completely dried up, as Harrods’ managing director Michael Ward warned that Asian and the U.S. tourists may not return until 2022, the retailer said it was anticipating a 45 percent drop in annual sales and a 95 percent drop in visitors to its flagship in London’s Knightsbridge, which means the retailer will be making at least 1 billion pounds less in 2020.
Last July, Harrods said it would reduce its workforce of 4,800 by up to 14 percent. The cuts came down on segments of the business “most adversely impacted by the loss of trade” from the closure.
In its Companies House statement filed last November, Harrods declined to make any projections about how the business will unfold, but it did say that it has “adequate cash and available facilities to fund its operations for the foreseeable future.”
The retailer has also reset its agreements with lenders, swapping its usual covenants for a monthly liquidity test and a quarterly EBITDA covenant through April 2021.
Harrods is also speeding up its China expansion. The retailer set up the Harrods Studio, a three-day activation, during Shanghai Fashion Week last October, and launched the Harrods Residence, a permanent private, personal-shopper-only venue in Shanghai in December to cater to its high-net-worth clientele in China, who cannot fly to London for the time being. It plans to expand this concept to other luxury spending strongholds such as Chengdu, Beijing, and Shenzhen.
Harrods did not respond to a request for comment at press time.
A spokesperson from SKP later told WWD that Huamao Group is not involved with SKP on its strategy, its operations, or its performance.
“Therefore, the statement of Mr. Fang does not reflect SKP’s position or opinion. The figures shared by Mr. Fang are his interpretation of SKP’s performance based on a very partial level of information. SKP would never possibly be satisfied to overcome any of the world’s leading department stores at a moment when their business is deeply harmed by the current sanitary disaster,” the spokesperson added.
Editor’s Note: This story has been updated to include a statement from SKP regarding Huamao Group not being involved with the Beijing mall.