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Profit at Harvey Nichols hit by investment

Harvey Nichols has reported a 30% drop in operating profit before exceptional items to £13.9m for the year to March 28 as it continues to invest in its store estate.

The luxury retailer invested £6m into upgrading and maintaining stores during the year, a 107.4% increase on the year before. It said the fall in profit was caused by higher operational costs.

EBITDA dropped 21.2% to £20m year on year, while total profit was £7.6m, down from £9.3m.

Turnover was flay year-on-year. However, the department store group said it was a “satisfactory trading performance” in a “challenging environment”, but added that customer spend was stable in the retail sector.

Gross margin was flat at 56%.

The retailer said it would continue its “aggressive” refurbishment programme this year, with the Knightsbridge store in London at the centre of its plan. Renovations started in July last year on its two menswear floors, which are scheduled to reopen in April.

The ground floor of the department store will be refurbished this summer, affecting the beauty and accessories areas. It will be finished by Christmas 2016.

Harvey Nichols opened a new store in Birmingham in July 2015.

Group chief executive Stacey Cartwright said: “Harvey Nichols has maintained its top-line financial performance for 2014/15 against a backdrop of an increasingly challenging external environment.

“We are well advanced now on our journey to revitalise the Harvey Nichols brand with a significant investment programme in technology, our physical stores, our digital channel and in our people, to create a differentiated and compelling customer offer.”

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