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The cost of payouts to survivors of abuse allegedly perpetrated by Mohamed Al Fayed has pushed Harrods into the red, as the luxury department store group compensates more than 100 of its former owner’s alleged victims.
Harrods reported a pre-tax loss of £34.3mn in the year to February, compared with a profit of £111.5mn the year before, according to company accounts seen by the Financial Times. Revenues were broadly flat at just over £1bn against a backdrop of a slowdown in luxury spending.
The drop was driven in part by a £62.3mn provision for “employee welfare redress and related expenses on historic allegations”.
Harrods’ results come a year after the BBC broadcast claims of sexual assault, including rape, spanning decades against Al Fayed, who died in 2023 aged 94.
The Egyptian businessman owned Harrods, which trades from a vast flagship emporium in Knightsbridge, London, between 1985 and 2010. He then sold it to the Qatar Investment Authority, which has owned it ever since.
Michael Ward, who worked alongside Al Fayed for five years after joining Harrods as managing director in 2005, said more than 100 survivors had entered the redress process since it launched in March.
Victims stand to be paid general damages of up to £200,000. The compensation scheme also allows for other types of claims, such as work impact payments of up to £150,000 for loss of employment opportunities resulting from sexual assault. Individuals can apply for more than one form of compensation.
Ward, who has said he did not know of any abuse at the time of the alleged incidents, said in a statement that “awards and interim payments began being issued to eligible survivors at the end of April and the scheme will remain open until March 31”.
In June, Harrods asked the High Court to appoint special executors to the estate of Al Fayed in an attempt to open up another route for compensation.
The group, which also operates smaller stores at London’s Heathrow and Gatwick airports, as well as a small chain of beauty stores, also blamed the drop in profits on weaker beauty trading and modernising some of its systems.
Despite this, Ward said he remained “confident in the strength of the business, and the resilience of the luxury sector”.
Harrods was one of a string of UK retailers, alongside Marks and Spencer and the Co-Op, to fall victim to a cyber attack in the spring. In its accounts the company said the attack “was promptly contained with no material impact on operations, systems or customer data”.
However, hackers stole details of 430,000 Harrods customers last month in an attack on a third party provider to the retailer. Harrods has said the data was limited to basic information and did not include passwords or payment details.
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