Harrods has reported a return to profit after a year in which it used digital to adapt to the changing way shoppers wanted to buy during the Covid-19 pandemic, while also investing in physical retail. It says it is now confident of returning to long-term sustainable growth as it maintains that momentum.
The luxury department store says its 2021 figures still reflect the effect of pandemic restrictions, with its Knightsbridge flagship store closed for 10 weeks during the third UK lockdown, and as international tourism continue to be subdued. Nonetheless, it says its performance was well ahead of initial expectations, as it adopted tools such as virtual personal shopping.
The update came as Harrods reports turnover of £581.9m in the year to January 29 2022. That’s 35.5% up on the £429.5m it reported in 2020. However, it’s still a third (33.2%) lower than the £870.8m it reported in pre-pandemic 2019.
Pre-tax profits of £41.7m represent a £99m improvement on the pre-tax loss of £57.3m that it reported the previous year. However, the figure lags behind its pre-pandemic performance – being 78% lower than pre-tax profits of £191.4m reported in 2019.
Tim Parker, chief financial officer at Harrods, says: “2021 (y/e 29 January 2022) saw the business begin an encouraging recovery despite the continued, although moderating, impact of the pandemic.”
Parker adds: “Our ability to adapt our trading model by establishing remote selling platforms and virtual personal shopping services showcased the agility of our colleagues during the period. We also continued to invest in our physical and digital offering during the pandemic, showcasing our confidence in the outlook for the business. Trade performance towards the end of the year was particularly encouraging, highlighting the strength of our long-standing customer and brand relationships as well as the continued resilience of the luxury market.
“While performance remained below pre-pandemic levels, and our short-term view remains cautious, we have confidence in maintaining the momentum from 2021 and are optimistic on our return to long-term, sustainable growth.”
Harrods, which sells online and through its Brompton Road flagship store, is a Top500 retailer in RXUK Top500 research.