Upmarket stores group Harvey Nichols today reported a 20% slide in profits after being hit by the post-11 September drop in tourism, but said trading was now improving.
The group, which has its flagship store in London’s Knightsbridge as well as a store in Leeds, said pre-tax profits for the year to 30 March slid to £12.5m although sales were up 2.5% at £140.4m.
Profits were hit by a “substantial reduction” in the number of UK customers and tourists – especially US visitors – coming to its London store in the months following the US terrorist attacks.
As a result it cut prices aggressively in its January sale to make sure it did not have old stock left over, meaning margins slipped.
In addition, its London restaurants, Oxo Tower and Prism, were hit by the downturn.
However, chief executive Joseph Wan said he was seeing “signs of improvement”.
Tourist numbers, although not back to previous levels, were “slowly returning”, he said.
He said for the nine weeks since 30 March, like-for-like sales, which strip out the effect of store expansions and openings, rose 3.7% against last year.
The group added that trading at Oxo Tower had recovered rapidly, although Prism was taking longer to bounce back.
And in contrast to the slide in trading in London, its Leeds store recorded a 20% rise in sales over the last year.
Harvey Nichols is reducing its dependence on London by opening further stores regionally.
Wan said the group would open a new store in Edinburgh in September and one in Manchester next autumn.
He is also planning to open further small-format stores in addition to the group’s shop in Birmingham, opened in October.
Harvey Nichols said sales performance to date at the Birmingham store had been “very encouraging”.
Shareholders will be paid a dividend of 7.7p, the same as last year. Shares in the group rose 2% to 212.5p.
EGi News 13/06/02
