Harvey Nichols makes loss after heavy investment, sees flat sales
Harvey Nichols has swung to a loss after major investment designed to keep it competitive with luxury rivals such as Knightsbridge next-door-neighbour Harrods and Selfridges in London’s West End.
Both of those companies have committed mega millions to upgrading their stores and websites. Harvey Nichols needs to keep up with them in the intense fight to attract not just the luxury shopper but the all-important travelling luxury shopper from locations such as China, the US, Russia and the Middle East.
Harvey Nichols made a pre-tax loss of £6.7 million for the year to April, having reported a small profit the year before. And it made an ebitda pre-exceptionals profit of £7.3 million, down from £12 million. That happened as it underwent a year-long revamp at its London flagship. Turnover was flat in the period at £194 million, which could be seen as an achievement at a time when parts of the store were out of action due to the refurbishment works. Large parts of the ground floor were unavailable as selling space during the revamp.
CEO Stacey Cartwright, who is due to take over at deputy chairman, said the retailer has “received excellent customer and industry reaction to our unique offer across beauty, accessories and fine jewellery.”
Harvey Nichols has 15 stores in the UK and abroad and it will rise to 16 next year with its long-expected launch in Doha, Qatar. But while its big UK rivals have fewer stores, it lags them in overall turnover size. In the year to January, Harrods broke through the £2 billion sales barrier for the first time and operating profit reached £253.2 million. Harrods’ Qatari owners have invested over £450 million in its flagship in recent years with another £200 million still to come.
In the same period, Selfridges sales rose 16% to £1.6 billion, and operating profit rose 18% to £180 million. It has spent several years pushing through a £300 million store transformation programme.
They, and Harvey Nichols itself, are all reacting to a boom in the ultra luxury segment and also a sharp increase in London tourist luxury spending following the Brexit vote and the fall in the value of the pound. But while the spend on stores for this trio is huge, also important are their online operations and they’re investing in them too as they leverage the power of their well known names in a growing luxury e-tail market globally.
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