“Tough conditions” don’t stop Harrods from increasing sales and profits

According to the last filed records with The Companies House, sales at Harrods grew by 3.7 percent last year to 1.7 million pounds, boosted by strong sales in its jewellery department, and despite “tough conditions”.

Pre-tax profits at the iconic London luxury department store increased by 16.9 percent to 129.7 million pounds. On the downside, Harrods' Qatari owners received a slightly smaller dividend: 100 million pounds compared to the previous year’s 103 million pounds.

As highlighted by ‘City A.M.’, the company’s accounts also reveal that the Qataris transferred the ownership of the Knightsbridge store to a new company, Harrods Property Holdings, at a value of 225.1 million pounds.

Harrods enjoys “healthy results” in 2015, despite the Brexit

Nivindya Sharma, Senior Analyst at Verdict Retail, commented the “healthy set of results”, highlighting how the retailer acknowledged that trading conditions last year had been tough, “but its Knightsbridge store’s destination status, the continuing success of its travel format, excellent mix of luxury brands and consistent focus on providing a theatrical in store shopping experience assisted the iconic department store operator to weather the difficult trading environment in 2015.”

Sharma also pinpoints that “While Harrods’ position among its department store counterparts remains unrivalled in terms of an aspirational brand image and heritage status, helping to draw in hordes of international tourists; it has been gradually branching out and seeking to modernise its proposition since it came under new leadership in 2010.”

In regards to how the ongoing political and economic situation in the UK might affect its future trading and how jewellery sales have been the company’s bestseller, Harrod’s managing director since 2005, Michael Ward, warned that the situation was unlikely to continue as he predicted the prices of luxury watches will increase by as much as 20 percent. “We won’t put up prices on the stock that we already own but brands will be looking to pass on the increased costs next season”, Ward said.

Back in August, Harrods’ first executive announced that he was shelving plans to step down in order to help the business deal with "changes to the economy" following Brexit, said that the number of overseas visitors had boomed following the vote as international shoppers have been attracted to lower prices.

On a positive note, Harrods is well positioned to benefit from the rush of international tourists looking to capitalise upon the weak pound, which will help boost FY 2016/17 turnover; but with prices set to rise in 2017 especially in key categories such as jewellery and leather goods; “the retailer will have to work harder to tempt shoppers,” explains Sharma in a research note.

Photo:Harrods Instagram