Harvey Nichols, the esteemed luxury department store, has suffered a substantial decrease in sales and a surge in losses due to the adverse effects of the COVID-19 pandemic. In the fiscal year ending March, the company experienced a drop in sales from £222 million to £121 million, while post-tax losses escalated from £15.5 million to £38.6 million. On an EBITDA basis, losses skyrocketed to £28.1 million compared to a meager £1.1 million in the previous year.

Throughout the year, Harvey Nichols, which operates eight stores in the UK and Ireland and six international stores, was confronted with extensive store closures as a result of stringent lockdown restrictions. Even when the stores were permitted to open, the cautious spending behavior of consumers, coupled with the cancellation of weddings, events, and parties, severely impacted the demand for luxury fashion.

The prolonged closure of the stores, which lasted for nearly eight months, dealt a devastating blow to Harvey Nichols. Despite efforts to bolster online sales, the loss in revenue could not be entirely offset. The company’s CEO, Manju Malhotra, expressed the significant impact of the physical store closures, as they are typically favored by tourists and local luxury fashion enthusiasts.

However, Harvey Nichols’ owner, Dickson Poon, remains dedicated to supporting the business. The company managed to secure a loan of £66 million, with Poon personally providing £26 million. Additionally, Harvey Nichols secured a £5 million overdraft facility and a new £35 million five-year term loan. Furthermore, the company received over £13 million in government support through the furlough scheme.

To mitigate the challenges imposed by the pandemic, Harvey Nichols prioritized cost control and cash flow management. Investments were made in IT infrastructure and the webstore to drive online sales. The company also expanded its product offerings by introducing kidswear. Additionally, Harvey Nichols leveraged online platforms like Farfetch and Ocado to sell its products, maintaining strong partnerships with these technological allies.

Looking forward, Harvey Nichols is investing in technology to further elevate the customer experience. A new customer rewards program is set to launch at the end of the upcoming month, and a transactional app is currently in development. These investments aim to fortify the company’s online presence and attract customers in the increasingly competitive luxury retail industry.

Despite the challenges faced by Harvey Nichols, the infusion of fresh funding and the strategic focus on online sales and technological advancements offer a glimmer of hope for the company’s future. With unwavering support from its owner and a resilient business strategy, Harvey Nichols is determined to recover from the pandemic’s impact and reclaim its standing as a premier luxury department store.

Useful links:
Official Harvey Nichols Website
Farfetch Online Platform