Harvey Nichols losses narrow as sales bounce back

Harvey Nichols has published its results for the year to April 2022 with the company remaining loss-making, but its overall performance clearly improving.

The results came in several filings for different parts of the business. The main release was for the parent entity — Broad Gain (UK) Limited —which is responsible for running the seven UK stores, one in the Republic of Ireland, the online store, and for international licensed stores.

It was clearly a year of great contrast for the business as a whole with it beginning in full lockdown and ending with a relative return to normality.

That helped revenue jump to £191.67 million from £121.31 million in the previous year. Although the latest year was a 53-week period, compared to 52 weeks previously, the revenue leap was clearly much more than could be accounted for simply by the extra week and underlined the bounce-back as the pandemic ended.

At the same time, the gross margin rose to 47.1% from 37.3%, but the company was loss-making on an EBITDA basis. The loss was £3.15 million, which was much smaller than the £28.53 million deficit of the previous year.

The net loss was a larger £31.79 million, but that was down from a loss of £38.69 million the year before.

Capital expenditure had increased during the year to £2.8 million from £1.6 million with the spending focus including the launch of a new international customer loyalty programme, a transactional app and IT improvements to support the growth of the website.

The retailer also said it was affected by supply chain disruptions and staffing shortages as a result of Brexit, as well as the removal of the tax-three shopping perk for international tourists.

Meanwhile, Harvey Nichols and Company Limited also reported higher turnover and lower losses.

This unit is responsible for the operation of the Harvey Nichols flagship store in London’s Knightsbridge, as well as being the HQ for the entire Broad Gain group of companies.

Turnover rose in the 53 weeks to £57.8 million from £27.3 million in the previous 52-week period.

It too was loss-making with an operating loss of £3.75 million compared to £17.7 million in the previous year. The loss after tax was £4.66 million, an improvement on the £17.4 million loss of the earlier period.

The company said the loss came as footfall gradually returned to city centres but hadn't reached pre-pandemic levels. It was also affected by the company investing more capex as mentioned above. The amount attributable to the company was just over £1 million compared to £745,000 a year earlier, largely spent on its IT systems.

The series of results also included a filing for Harvey Nichols.com Limited. As the name suggests, the responsibility here is to run the retailer’s webstore.

But in this case, the return to some sort of normality had a negative impact. Like many e-tailers, the unit had benefited from the increase in online shopping due to the pandemic, but sales in the year in question weren't as strong for the business as the reopening of physical stores saw customers turning away from the enforced e-shopping of lockdowns.

That meant turnover in the year dropped to £53.7 million from £66.6 million. However, the operating loss was slightly smaller than before at £5.4 million (after £5.7 million in the previous year). And the net loss was £5.7 million, also a bit smaller than the £5.99 million of the previous period. The company managed to narrow its losses despite the sales fall due to the aforementioned investment in its online operations.

Harvey Nichols losses narrow as sales bounce back

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