Selfridges and Harrods, two of London’s landmark retailers, saw sales and profits surge in fiscal 2017, proof that fashion and luxury shoppers are shrugging off the country’s Brexit anguish and taking full advantage of the weaker pound.
Selfridges posted an 11.5 percent uptick in 2017-18 revenues to 1.75 billion pounds ($2.3 billion) as it completed a major multiyear expansion of the accessories hall in its Oxford Street flagship.
The retailer said in the fiscal year ended Feb. 3, operating profit rose to a record 181 million pounds “against a challenging retail backdrop and continuing major investment across the business, in both its stores and digital platforms.”
The store pointed to the completion of its sprawling accessories space, which takes up 60,000 square feet and makes up one-third of Selfridges’ ground floor, and one-tenth of the 600,000-square-foot flagship.
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During the past year, the retailer also opened major boutiques, such as Louis Vuitton and Tiffany, at its Birmingham store.
Selfridges added that in fiscal 2017-18, there was strong growth in digital, which was supported by significant investment in its Chinese language transactional website, an Android app and a U.K. and international delivery proposition through its Selfridges Plus subscription service.
Paul Kelly, managing director of Selfridges Group, said “significant investment, long-term planning and successful implementation remain the key elements in our drive to remain at the forefront of global luxury retailing.”
The store added that in the current fiscal year, it is planning to develop its digital capabilities further and complete the four-year-long, 300-million-pound capital expenditure program, much of which was spent on the accessories hall overhaul.
The store plans to construct a new triple-height entrance on Duke Street that links the historic 1909 building and the ’30s extension.
Anne Pitcher, managing director of Selfridges, said it was happy with the results “despite difficult retail conditions and consumer confidence uncertainties. We continue to challenge ourselves to be daring in all aspects of our global strategy and to present extraordinary destinations for our customers. We are optimistic for further growth in 2018.”
Turnover increased by 4.6 percent to 862.5 million pounds, while pretax profit was up 9 percent to 215.9 million pounds. Profit after tax grew 8.7 percent to 176.7 million pounds.
The company said while the pace of growth has leveled off after hitting historic peaks following the 2016 fall in the pound, “growth remained consistently strong, and overall sales increased over the course of the year.”
Like Selfridges, Harrods has been investing in its London flagship. The company said in 2017, capital expenditure was 55 million pounds, 12.9 percent more than in the previous year.
“This focus on capital expenditure is a long-term investment over the course of the coming three years and is expected to continue until 2021,” the company said. Areas of focus for 2017 included the opening of the first stage of restoring the food halls and the launches of the fine-watches and jewelry departments and the Harrods Wellness Clinic.
High-end retailers such as Harvey Nichols, which last month reported that 2017-18 revenues were up 9 percent to 210 million pounds and earnings before interest, taxes, depreciation and amortization up 102 percent to 14.7 million pounds, are proving far more resilient than chains such as Debenhams, Marks & Spencer, House of Fraser and John Lewis.
The latter are suffering from onerous leases, crippling business taxes, lack of investment and shrinking brick-and-mortar sales, while profits have been hit by an ingrained culture of discounting.
The big luxury stores, on the other hand, benefit from waves of tourists who regularly flood into London from Europe, the Middle East, the Far East and China. That’s one reason why Global Blue, the tax-free shopping company, recently opened a VIP, high-net-worth lounge on Albemarle Street in Mayfair.
The multilingual, invitation-only lounge, shopping and concierge service is aimed at international big spenders. Global Blue said it expects to greet more than 40,000 guests in the first year alone. It offers a dedicated shopping consultancy, immediate tax refunds and space for high-end brands and jewelers to connect with global customers.
The Albemarle Street lounge is the latest one to open, following similar sites in Milan, Rome, Venice, Madrid, Munich and Paris.
On Monday, Global Blue said London and the U.K. could get a further boost from tourists starting this week as the Chinese holiday period known as Golden Week begins. It lasts until Oct. 7.
Global Blue said in 2018, Chinese visitors were the U.K.’s biggest group of tax-free spenders, accounting for 26 percent of total tax-free sales in the nation’s capital between January and August.
Chinese spending grew 8 percent in 2017 and 54 percent in 2016 (following the post-referendum fall in the pound) during October’s Golden Week.
In the longer term, these big retailers may have even more to look forward to, as Prime Minister Theresa May has promised to use lower taxes and looser regulations to encourage businesses to remain or settle in Britain. She is promising to institute the lowest rate of corporation tax in the G20, with the aim of proving that Britain is open for business.
Already, Chanel plans to shift its corporate headquarters to London, with offices set for New Bond Street, while Apple has secured 500,000 square feet of office space at the redeveloped Battersea Power Station.
The property division of Berkshire Hathaway has teamed with high-end real estate agents Kay & Co. to break into the U.K. property market, while Google is building a 1-billion-pound London headquarters at the new King’s Cross development.
This year, Facebook moved into larger offices in Fitzrovia, creating an extra 800 jobs in the capital.
This story was reported by WWD and originally appeared on WWD.com.