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Harrods has revealed it has returned to profit for the year ending 29 January 2022 (FY21), as the group’s operating profit hit £55.5m, up +£121.9m year-on-year from a loss of -£66.4m in FY20.
Harrods’ turnover also increased 35.5% to £581.9m, up year-on-year from £429.5m, and gross transaction value (excluding VAT) grew 42.2% to £1.32bn.
Profit after tax also rose by +£99m to £41.7m, up from a loss of -£57.3m, and Harrods said FY21 saw the business begin an encouraging recovery despite the continued impact of the pandemic.
According to the Sunday Times, Harrods attracted more domestic shoppers with new restaurants and a hair salon. Strong demand from middle eastern shoppers also helped the group to mitigate a reduction in Chinese tourists. Sales to Chinese shoppers accounted for 15% of sales last year, compared with 23% in 2019.
A series of price hikes have also reportedly helped sales, with Chanel having raised handbag prices six times since the onset of the pandemic.
Additionally, Harrods’ performance was impacted by its Knightsbridge store being closed for 10 weeks during the third lockdown, international travel remaining subdued, and the suspension of the VAT Retail Export Scheme.
Overall, Harrods’ performance remained below pre-pandemic levels, and the group’s short-term view remains cautious. Nevertheless, Harrods said it has confidence in maintaining the momentum from 2021 and is optimistic on its return to long-term, sustainable growth.
Tim Parker, chief financial officer, said: “We are delighted to share that Harrods performed well ahead of our initial expectations, with Gross Transaction Value up 42% on 2020 and the business strongly improving profitability.
“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.”
He added: “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.”
