Divi ditched as Harvey Nicks sees profits halved

Published on Tuesday 22 February 2005 03:05

PROFITS at upmarket department store group Harvey Nichols more than halved last year, causing the chain to ditch a dividend payment.

Pre-tax profits plummeted 51.2 per cent to 2.43 million in its last financial year, from 4.97m a year earlier, as "challenging trading conditions" took their toll, according to accounts posted yesterday with Companies House.

The group blamed the tumble in profitability - which came despite a 2.64 per cent improvement in turnover to 76.12m - on the impact of the Iraqi war and the SARS virus.

As a result, no dividend was paid for the 53 weeks to 3 April, against a 28.2p per share pay-out the previous year, when shareholders received 3.1m.

Despite that, directors’ emoluments lifted 6.37 per cent to 919,000. The highest paid director notched up a 2.5 per cent increase to 322,854, as well as an 11.55 per cent rise in pension benefits to 35,578.

Harvey Nichols, which returned to private ownership in January 2003, yesterday declined to comment on the results - the first figures to include a full year of trading at its flagship outlet in the Scottish capital, opened in September 2002.

The business, which has its roots in 1813, anticipated a more favourable operating environment in its current financial year.

"Barring any unforeseen circumstances, the directors expect market conditions to gradually improve in the coming year," said the accounts.

A company spokesman told The Scotsman Harvey Nichols foresaw "promising and continued" growth at its 11m store in Edinburgh’s St Andrew Square.

"The group as a whole is continuing to perform," he said. "We had a fantastic Christmas and a great sale. We’ve managed to make sure our stock is on the shop floor a lot earlier, so our spring stock is in-store earlier than perviously and we’ve seen good sales."

Harvey Nichols - which was recently ranked among the top ten shops in the world alongside Harrods, Selfridges and Fortnum & Mason, in Retail Week - has outlets in London, Manchester, Birmingham, Leeds and Edinburgh in the UK and another in Riyadh, Saudi Arabia, opened in May 2000.

The group has pursued an international expansion strategy since it was acquired by Hong Kong-based businessman Dickson Poon - whose retail businesses extend to North America, Europe, Japan, China and south-east Asia - more than a decade ago. Further stores are due to open in Dubai in the United Arab Emirates and Hong Kong during the second half of this year.

The firm listed on the London Stock Exchange in April 1996 and later launched the Oxo Tower Restaurant on London’s South Bank and the Prism restaurant in the City of London, before delisting seven years later.

The groups existing Knightsbridge store was opened in the 1880s and in 1919 the group was bought by Debenhams.

It changed hands in 1985, becoming part of the Burton Group, and again in 1991, when it was acquired by Poon’s Dickson Concepts, an international retailer of branded luxury goods, listed on the Hong Kong Stock Exchange.