Harrods transaction values halved in pandemic
Luxury department store Harrods has filed its accounts for the year to the end of January 2021 and they show just how big an impact closed borders and lockdowns had on its business.
The company said that its gross transaction value including VAT just about halved. It fell to £1.097 billion from £2.201 billion in the previous year. And turnover dropped to £429.5 million from £870.8 million.
That meant the business generated a post-tax loss of £57.3 million after posting a profit of £191.4 million in the previous year. The operating loss for the period was £66.4 million, down from a previous profit of £203.3 million.
The company had been investing heavily in the store but the pandemic period saw a reduction in capital expenditure to only £44.7 million from £114.1 million previously.
Harrods said that the pandemic was a “significant challenge” for the business with the Knightsbridge store closed during three lockdowns in the 12-month period. Its online channel saw year-on-year growth in line with what the rest of the retail industry was experiencing (it didn’t specify a percentage), but that couldn’t make up for the closure of its massive Knightsbridge store.
As well as the uncertainty surrounding the pandemic, Harrods also warned that Brexit could impact the business.
“It is anticipated that the predominant impact of Brexit on Harrods Limited revolves around the removal of the Retail Export Scheme that came into effect on January 1 2021,” the company said.
But it added that “it is not possible at this time to quantify the impact on future trade as a result of the loss of this benefit to overseas customers, given international travel has still not returned to pre-Covid levels.”
