Harrods has returned to profit, despite continued pressure across the global luxury market and rising staff and distribution costs.

The Knightsbridge department store posted a pre-tax profit of £84.9m for the year to 31 January 2026, reversing a loss of more than £34m in the previous year.

Turnover climbed 1.2 per cent year on year to £1.08bn, as the luxury retailer continued to invest in its flagship store and customer experience.

However, operating profit slipped to £172.3m from £177.7m a year earlier, which Harrods attributed to increased investment in employee pay and higher distribution costs.

An average 3.2 per cent pay rise for staff added £8.5m to costs during the year, while higher employer National Insurance contributions cost the business a further £5.7m.

Harrods chief financial officer Geoff Weaver said the results reflected “further stabilisation and modest growth”, adding that the retailer had continued to outperform the wider luxury market despite ongoing sector headwinds.

The return to the black follows a previous financial year impacted by a £62.5m provision for compensation and associated costs relating to survivors of historic sexual abuse by former Harrods owner Mohamed Al Fayed. The provision was accounted for in its prior-year results and was therefore not repeated in the latest accounts, although additional costs were incurred.

Harrods said its redress scheme, which ran from March 2025 to March 2026, has so far compensated around 100 women, with further claims still being resolved.

The company is pushing ahead with further investment in its Knightsbridge flagship, including the redevelopment of its womenswear offer. The retailer opened its first International Designer Room in June as part of the wider Womenswear Masterplan.

It is also reshaping its senior leadership, with chief information officer Andreas Efstathiou set to take on the newly created chief operating officer role in September, bringing functions including supply chain, facilities management, engineering and security under one executive.

Weaver said Harrods remained “cautiously optimistic” despite continued macroeconomic and geopolitical uncertainty, with the retailer focused on its luxury proposition, brand partnerships and further investment in its flagship.

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