Profits at Harvey Nichols will rise more than 35% to £15 million this year as the department store group has benefited from growth in the luxury market, chief executive Joseph Wan told Drapers this week.
Wan said the 10-store business had made gains due to the thriving luxury market and Harvey Nichols' emphasis on increased quality of product, as well as economies of scale achieved via its international expansion. Sales for the year to March 31 are forecast to increase by about 5% to £200m, he added.
"There have been a lot of changes in the market over the past five years, with more value retailers entering the market and customers shopping across the sectors. This has made it more important for department store groups to have a strong identity, and we have been able to maintain our upmarket positioning because our shoppers will pay for quality product if it is value for money. Department store groups in the middle ground will find it more difficult."
The business has also lined up a raft of brands to add to its offer as part of a £1.5m expansion of its Birmingham store at The Mailbox shopping centre.
The store will increase in size by 35%, creating an extra 5,000sq ft, with the number of contemporary and designer brands doubling. The accessories and footwear departments will grow by 30%.
New additions to the Birmingham shop include Alexander McQueen, Stella McCartney, Marc by Marc Jacobs, Missoni, MaxMara, Just Cavalli and Sissi Rossi. The store's denim area will double in size, with more styles from existing brands such as 7 For All Mankind, Armani Jeans and Buddhist Punk. The expansion is scheduled to be completed by autumn.
Wan said: "The Mailbox store has a lot of potential for us and we are putting in the brands that customers are asking us for. We expect sales densities to increase from £450 per sq ft to £600 per sq ft, which is about the same as our Leeds store."
Harvey Nichols is also planning to sell bags online as part of plans to develop the company's online business, although there is no timescale for this. Wan said that any clothing on the website would be limited to more basic products.
The group will open a store in Bristol in autumn 2008 and also has plans for a shop in Jakarta, Indonesia in spring next year.
Harvey Nichols has six stores in the UK and Republic of Ireland and four international stores in Riyadh in Saudi Arabia, Hong Kong, Dubai in the United Arab Emirates, and Istanbul in Turkey.