Harrods, the famous luxury department store in London, has released its financial accounts for the year ending January 2021, revealing a significant decline in business as a result of the COVID-19 pandemic. The store, which is typically a popular destination for shoppers both from the UK and abroad, experienced a sharp decrease in its gross transaction value including VAT, which went from £2.201 billion to £1.097 billion. Furthermore, turnover decreased from £870.8 million to £429.5 million. Consequently, Harrods reported a post-tax loss of £57.3 million, a major contrast to the £191.4 million profit it had achieved in the previous year. The operating loss for the period was £66.4 million, compared to a profit of £203.3 million previously.

Throughout the pandemic, Harrods had been making significant investments in its store, although these were reduced to £44.7 million from £114.1 million. The closure of its flagship Knightsbridge store during the three lockdowns in the 12-month period presented a significant challenge for the business. Even though the online channel experienced year-on-year growth, the closure of the physical store had a considerable impact. Additionally, after reopening, the store faced difficulties due to the decline in inbound tourism, which remained at a fraction of its previous levels. This decrease in foot traffic was especially problematic for Harrods, given its reliance on high-spending international tourists.

Despite the tough circumstances, Harrods made it a priority to maintain strong relationships with its suppliers by ensuring timely payments and honoring agreements. The retailer aimed to support its suppliers during the pandemic and beyond, highlighting its commitment to them. Furthermore, the company focused on reopening the store in a strong position to ensure long-term success.

Looking ahead, Harrods expressed concerns about potential uncertainties arising from changes to tax-free shopping rules that were implemented on January 1, 2021. However, the impact of these changes remains uncertain since international travel has not fully resumed.

In addition, Harrods has already experienced the consequences of Brexit, facing additional importing costs in duty and administrative fees worth approximately £500,000. These increased costs only apply to imports for which Harrods is directly responsible, and the company expects to face higher prices from suppliers in the future, leading to further expenses.

Despite these challenges, Harrods maintains confidence in its financial stability and its long-term contracts with various suppliers. The company believes it is well-prepared to successfully navigate its business going forward.

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