Friday 30 October 2015 12:23 pm

Harrods cuts dividend by over 30 per cent despite rise in profits

Harrods, the landmark London department store, cut its dividend payment by more than 30 per cent this year after a fall in turnover caused by 'tough trading conditions'.

The retailer's financial accounts reveal although profits edged up 4.2 per cent, investors will receive a reduced dividend payment of £103m, a 31.3 per cent drop from last year's £150m record payout.

Qatar’s sovereign wealth fund, which bought the retailer for £1.5bn in 2010, has invested £48.6m in the luxury retailer over the last year. Yet annual turnover during this period, has fallen 3.1 per cent – from £794m to £769m.

However, undaunted, Harrods said it expects the same level of investment to continue this year.

The company's financial accounts reveal pre-tax profits rose from £140.4m to £146.3m for the year to the end of January. Operating profits were also up 2.9 per cent to £126.5m over the same period.

At the start of the year it was revealed Harrods is paying the biggest business rates bill of any business in London.

With more than a million square feet of space, the Knightsbridge retailer has to offset its premium £12.04m bill for its high-end location with other cutbacks.

The company's accounts show the luxury retailer has cut £1.7m in corporation tax and slashed 13m off its total sales costs in the past 12 months.

And it may need to keep cutting as the famous façade loses its shine. In the past year, depreciation has cost the seven-storey store £4.2m than last year (£36.1m) and repairs to its historic terracotta façade cost £2m, a £600,000 increase over the same period.

Over 150 years old, Harrods was founded in 1849 by Charles Henry Harrod as a small shop in a single room selling mainly tea and groceries. Now, according to its Latin motto, "Omnia Omnibus Ubique", it sells all things for all people.