// Harrods made a £51 million pre-tax profit last year versus a £68.3 million loss the previous year
// In its current year, Harrods expects sales to hit pre-pandemic levels but profits will lag behind due to rising labour and energy costs
Harrods returned to the black in its last financial year, as it made a pre-tax profit of £51 million in its year to January 2022, compared to a £68.3 million loss the previous year.
Sales rose 35.5% to £581.9 million in the year to January 2022 but Harrods boss Michael Ward told The Sunday Times revenue would recover to pre-pandemic levels in its current year as demand for luxury products like Rolex watches and Dior handbags soar.
Although sales were on track to hit the £870.8 million achieved in its year ending February 2020, before the pandemic wreaked havoc in the UK, profits will not hit the same levels due to rising labour and energy costs, Ward admitted.
The retailer experienced supply issues over the summer due to delays in its global supply chain.
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Middle eastern shoppers return
The dearth of international tourism had a big impact on Harrods’ sales amid the pandemic. However, as restrictions have eased, middle eastern shoppers have returned in their droves, mitigating the continued drop in Chinese consumers.
Sales in Chinese shoppers accounted for 15% of Harrods’ sales last year, compared to 23% in 2019.
Ward lamented the government’s decision to scrap VAT-free shopping for overseas visitors.
He told the newspaper: “The days of the Chinese tour groups are gone. The primary reason for Chinese tourists to visit the UK is shopping and now we are 20% expensive than Paris.”
Harrods has managed to attract more domestic shoppers by opening new restaurants and a hair salon. Ward said that its decision to sever ties to underperforming brand to devote more space to power brands in its Knightsbridge store had also helped to drive growth.
Many luxury brands have raised prices substantially as costs rise across retail’s supply chain, however, Ward said the cost-of-living crisis was not having any impact on Harrods’ customer base.
He said: “We are an anomaly. For affluent consumers we see a very, very positive outcome next year.”
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