Harrods plunged Â£ 68million into the red last year after pandemic shutdowns halved revenue, according to recently released accounts, and the luxury department store is now facing a strike by dozens of employees catering.
In a year in which the number of visitors to London plummeted and shops had to close for weeks, the Knightsbridge institution, which first opened in 1849, downsized and forfeited a dividend to its Qatari owners.
The company, whose owners have raised Â£ 125million through January 2020, said it was unlikely to pay another dividend for two more years. Harrods was acquired by Qatar Holding, the investment arm of Qatar’s sovereign wealth fund, in 2010 for an estimated Â£ 1.5 billion.
The company blamed government-imposed lockdowns for its hardship and said it had more than halved spending to just under Â£ 45million while cutting staff numbers from 145 to just less than 4,000.
United Voices of the World, which represents the servers and chefs at Harrods, said they were voting for members over a Christmas week strike after demanding that wages be raised to a minimum of Â£ 12 from per hour, compared to just over Â£ 9 per hour today. He said the unrest was in part caused by a heavy workload for staff after the job cuts.
UVW General Secretary Petros Elia said: âOur members work in the most famous luxury department store in the world, and yet they receive pittance wages while generating millions of pounds in profit for their bosses. . Our members are no longer prepared to tolerate this. “
Harrods cut jobs last summer after chief executive Michael Ward said a drop in tourist numbers and the need for social distancing were “having a huge impact on our ability to trade.”
A note in the company’s accounts released this week said the Covid pandemic had been a “significant challenge” for the company, which had put the majority of staff on leave during forced store closings. However, online sales increased over the period.
Harrods said its import costs had increased by Â£ 500million due to additional administration and taxes, while the removal of duty-free shopping for travelers in January this year was likely to hurt trade some tourists.
The company said it has extended by 18 months the terms of a Â£ 620million loan and a Â£ 200million credit facility repayable in April next year.
In a statement released after the accounts were released, Harrods said they reflected the pandemic’s “devastating” impact on businesses, but healthy cash reserves and strong growth before the pandemic had helped the retailer “get over it. the storm to come “.
âWe have a solid program that will allow the company to grow stronger, and while we know the recovery will take time, the first signs are very positive. We have seen a huge comeback in luxury demand and expect strong sales figures as we head into the peak Christmas shopping season. “
The company said it plans to have more outlets for its H beauty store across the UK and continued investment and presence in China.