Harrods, the renowned luxury department store, experienced growth in sales and profits leading up to February 2020. During this period, the store saw a 4% increase in gross transaction value, reaching £2.2 billion. Operating profit rose by 0.6% to £203.3 million, and pre-tax profit jumped from £211.4 million to £231.6 million.

Despite these positive results, Harrods has faced significant challenges due to the global pandemic. The store heavily relies on shopper traffic in central London, and with office workers staying at home and a decline in tourism, footfall has dramatically decreased. Central London footfall remains down by over 50% compared to last year. Harrods typically sees around 80,000 visitors per day, with Asian and American tourists making up about 70% of sales.

Managing Director Michael Ward predicts that a rebound for Harrods may not occur until 2022. However, recent news about the potential effectiveness of vaccines could expedite the recovery process. After reopening its flagship store in June, Harrods saw encouraging early trading, despite low tourist arrivals in the UK.

Harrods has tried to diversify its business with the opening of new premium H Beauty stores but still faces significant challenges. The current lockdown in England, particularly during the Christmas season, presents further difficulties. Additionally, the end of the tax-free shopping system for non-EU shoppers from the New Year poses a significant obstacle.

Despite these obstacles, Harrods maintains that it has sufficient funds to navigate through this uncertain period. However, the company refrains from making any predictions about the future and acknowledges the ongoing challenges in the retail industry. Harrods remains resilient but must confront and adapt to the changing landscape.

Useful links:
Official Harrods website
BBC article on Harrods’ challenges