Harrods plunged $ 68 million last year
In a year when visitor numbers in London plummeted and shops had to close for weeks, the Knightsbridge institution, which first opened its doors in 1849, cut its staff and paid a dividend to its Qatari owners.
The company, whose owners raised £ 125 million through January 2020, said it was unlikely to pay another dividend for two more years. Harrods was bought by Qatar Holding, the investment arm of the Qatari sovereign wealth fund, in 2010 for an estimated £ 1.5 billion.
Blaming the government-imposed bans on High Streets for its troubles, the company said it had more than halved spending to just under £ 45 million while cutting its workforce by 145 to just under 4,000.
United Voices of the World, which represents waiters and cooks at Harrods, said it was voting members out via a Christmas week strike after raising salaries from currently just over £ 9 an hour to at least £ 12 an hour. Unrest is partly due to a high workload on the employees after the downsizing.
Petros Elia, General Secretary of UVW, said: “Our members work in the most famous luxury department store in the world and still receive poverty wages while making millions of pounds in profits for their bosses. Our members do not want to accept that any longer. “
On Wednesday evening, a Harrods spokesman said: “In addition to the entire hotel industry, Harrods has had an extremely difficult 18 months with long closing times that have completely cut our ability to operate normally. The well-being of our employees and securing as many jobs as possible have absolute priority for us.
“We are constantly reviewing our compensation policies to ensure that they are in line with industry best practices. In addition to the basic salary, Harrods employees receive generous overtime, a service fee of 100% (minus a small administration fee) and a service package. “
Harrods cut jobs last summer after chairman Michael Ward said a plunge in tourist numbers and the need for social distancing would “have a major impact on our trading ability.”
A note on the company’s balance sheet released this week said the Covid pandemic was a “significant challenge” for the company, which put the majority of its employees on vacation during the forced store closings. However, online sales increased during the reporting period.
Harrods said its import costs had increased by £ 500 million due to additional administration and taxes, while the end of duty-free shopping for travelers in January this year would likely affect tourist trade.
The company said it had the terms of a $ 620 million loan.
In a statement released after the accounts were released, Harrods said they reflected the “devastating” impact the pandemic had on business, but healthy cash reserves and strong pre-pandemic growth helped the retailer “face the coming storm survive”.
“We have a robust program that will get the business back on its feet, and while we know it will take time to recover, the first signs are very positive. We have seen a tremendous return in luxury demand and expect strong sales as we head into the high season of the holiday season. “
The company said it plans to add more stores to its H beauty store across the UK and an ongoing investment and presence in China.