Harrods forced to reorganise £200m credit
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Harrods has been forced to reorganise its £200m credit line due to the second national lockdown causing the closure of its flagship Knightsbridge store.
According to The Sunday Times, the department store negotiated a revolving credit facility with the Qatar National Bank in August, to avoid breaching covenants it made in April.
However, the enforced four-week closure of its Knightsbridge store has placed the luxury retailer at risk of breaching said covenants.
Harrods has already faced difficulties due to the Covid-19 pandemic, as it was forced to make the “very difficult decision” of closing its doors in July, a decision that resulted in 680 job cuts.
Nonetheless, the 171-year-old luxury firm saw profits rise 11% to £191.3m in the financial year to February 2020.
This resulted in Harrods confirming it has sufficient cash for the foreseeable future in accounts filed last week.
Despite the cash reserves and £125m dividend the company was able to pay to its owners, the Qatar royal family, in 2019, the business is reportedly struggling due to a lack of non-EU tourists.
Michael Ward, managing director at Harrods, said government plans to remove tax-free shopping for non-EU tourists would “have devastating repercussions on the luxury sector and the British economy as a whole”.
