x Abu Dhabi, UAESunday 23 July 2017

£100 million dividend for Harrods' Qatari owners

Cash tills are ringing for the Qatari owners of Harrods, who paid themselves a £100.5 million dividend after a "record year" at the luxury London department store.

Harrods, owned by Qatar Holding, reported pre-tax profits of £125.3 million for the year ending on January 28. Andrew Winning / Reuters
Harrods, owned by Qatar Holding, reported pre-tax profits of £125.3 million for the year ending on January 28. Andrew Winning / Reuters

Cash tills are ringing for the Qatari owners of Harrods, who paid themselves a £100.5 million (Dh607.27m) dividend after a "record year" at the luxury London department store.

Harrods reported pre-tax profits of £125.3m forthe year ending on January 28, a 15 per cent increase on the previous year.

Qatar Holding, owned by one of the world's largest sovereign wealth funds, bought Harrods in 2010 for about £1.5 billion from the Egyptian tycoon Mohamed Al Fayed.

It is now looking to reap a return from the investment, having more than quadrupled its dividend, and has announced plans to boost the Harrods brand overseas.Dividends paid in the previous year amounted to £22.7m.

In what it called "another record year", Harrods said sales grew to £651.7m, an 11 per cent rise over the same period previously.

Nick Bubb, a leading retail analyst based in the UK, attributed the growth to shoppers from outside the country.

"Its success is clearly due to the London tourist boom and the high-spending and luxury brand-loving Chinese in particular," he said. "Given an 11 per cent rise in sales I am a bit surprised that profits weren't up by more than 15 per cent but it sounds like there have been extra costs [such as] in warehousing."

Jonathan De Mello, the head of retail consultancy at CBRE, said there had been a 15 to 20 per cent increase in the number of Middle East shoppers in London. He said this was "directly correlated" to the French ban on face veils.

"France banned the burqa and because of [that it] led to a lot of Middle East travellers that were going to France for luxury products then diverting over to the UK," he said.

"Harrods is the key port of call... As a result, the Qataris invested in specific areas within the store to cater for their tastes," he said.

Mr De Mello also said the London Olympics had helped bring more visitors to Harrods.

Its Qatari investors spent £107.8m in what Harrods called a "very significant programme of capital expenditure" in the store, which included a new distribution centre, head office and new boutiques.

"The directors expect to continue with a high level of capital expenditure in 2012," Harrods said in its financial filings.

Mr De Mello noted high-end retail stores continued to perform well in the UK despite the gloom in the overall economy.

"The luxury market continues to plough on. It's all driven by international shoppers," he said.

Aside from the Knightsbridge department store, Harrods also has concessions at London's Heathrow and Gatwick airports, has an online store and export arms, plus a property business called Harrods Estates Limited.

Meanwhile, Qatar is pushing the brand's overseas expansion.

"Qatar Holding ultimately intends to grow Harrods into a global enterprise that defines the luxury retail and leisure sectors," the company said last month.

Qatar Holding intends to open Harrods-branded hotels in Kuala Lumpur, New York, Paris and in China, it said.

Mr De Mello said Harrods stores would work well in overseas marketsprovided they did not dilute the London brand.

"Places like Brazil, China and the Middle East could do very well out of a store," he said.

"But they need to ensure that the London flagship is iconic."

bflanagan@thenational.ae

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