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Premium department stores defy downturn

Iconic department stores Harrods, Harvey Nichols and Fenwick have defied the retail gloom to notch up robust sales and profits over the past year.

Harrods reported a record year in terms of sales during the year to January 31, over one of the most tumultuous periods retailers have experienced.

Sales at Harrods grew 9% over the year to £751.7m, driven by a strong demand for international luxury brands and strong womenswear sales, which rose 15% year on year. Pre-tax profit was £56.2m versus £55.4m the year before. The iconic retailer said sales had remained “strong” since the year end.

Harvey Nichols chief executive Joseph Wan echoed Harrods’ sentiments. He told Drapers the department store group was now “in recovery” after profits slumped 40% to £10m in the year to March 31. “In the first four months of the current year, we have had a good financial recovery. We are exceeding budgets,” said Wan.

Wan put the success down to a number of counter-recessionary tactics, including adopting an aggressive markdown strategy and focusing on stock replenishment.

Wan added that the retailer’s Knightsbridge store in London was trading ahead 1% on a like-for-like basis as overseas visitors had been attracted by the weakness of the pound. Like-for-like sales across all stores were flat.

Wan said he was looking ahead with “cautious optimism” but that he was confident the business would produce improved profits on last year.

He added: “The economy as a whole will show volatility for the next year or two but the financial situation has stabilised. We will be able to rebound very strongly.”

In addition, Fenwick – which operates 10 department stores, including Bentalls in Kingston upon Thames in Surrey and Bracknell in Berkshire, and Williams & Griffin in Colchester, Essex – saw net sales, which include concession partners’ sales, grow to £363.4m in the year to January 30, versus £350.3m the year before.

However, pre-tax profit was £35.6m, down from £41.8m in 2008.

The directors of Fenwick said they believed the environment would “continue to be competitive” but that they remained “confident”.

Arnotts ‘still sound’

Irish department store Arnotts is understood to be in talks to secure its trade credit insurance position.

It is unclear whether Arnotts has had trade credit insurance reduced or whether it is seeking someone to underwrite it. It is not thought to have been withdrawn altogether.

Arnotts chief executive David Riddiford said the retailer was “very sound financially” and that shareholder and finance provider Anglo Irish Bank had backed plans to invest ¤5m (£4.3m) in its Henry Street store in Dublin.

Riddiford said sales since May had been “gradually improving”.

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