Harvey Nichols chief executive Joseph Wan has revealed that the luxury department store will return to record pre-recession profit levels in its current financial year but has warned of a drop in shopper spend in 2011.
Wan said the department store was poised to notch up profits of about £18m in the year to March 31, 2011, in line with the record levels achieved in the year to March 31, 2008.
The department store reported profits last year of £14m, up from the 40% slump the previous year of £10.4m, following the collapse of Lehman Brothers.
Wan said that Harvey Nichols had clawed back profits by “adapting to survive” and adopting a combination of strategies to plan for reduced demand, including better stock control. Turnover was flat during the year, which was attributed to the temporary closure of the fourth floor in the Knightsbridge store to introduce more accessible luxury price points.
In the current year the department store has experienced “strong” trading, which Wan expected to continue until Christmas, with a continued focus on adding more accessible price points, launching an own-label offer, ramping up online and expanding overseas.
He warned, however, that spending in 2011 will be hit following the VAT increase and likely public sector job cuts.