Qatar reaps high Harrods profits

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A night-time view of Harrods store in London, England.

Harrods, the world-famous London department store, recorded an 11% sales increase to £651.7m ($1bn) in the year to 28 January, with pre-tax profit rising 15% to £125.3m ($196.6m).

Qatar Holding, owners of Harrods, bought the retailer from Mohamed Al Fayed for £1.5bn ($2.35bn) in 2010, earlier this month revealed plans to open a chain of Harrods-branded hotels starting in London, Kuala Lumpur (Malaysia) and Sardinia (Italy).

The sterling performance reflects the significant demand for luxury products among wealthy visitors coming to London from Asia, Russia, Brazil and the oil-rich countries of Middle East and Africa.

Harrods is also likely to be enjoying strong trading during the Olympics, as foreign tourists flock to the British capital.

The Qatari fund took a record dividend of £100.5m ($157.7m) out of Harrods for the year to 28 January, more than four times the £22.7m ($35.62m) paid the previous year. In 2010, Mohammed Al Fayed expressed his frustration in getting a dividend approved by the trustee of the Harrods pension fund after he sold the business to the Qataris.

The Al Fayed family acquired Harrods in 1985. They paid themselves a previous record dividend of £74m ($116.11m) for the year ending February 2002. Harrods has continued to power ahead and grew pre-tax profits by 15% to £125.3m ($196.61) last year, according to accounts filed at Companies House.

Harrods said in its annual report that 2011 had seen a “very significant programme of capital expenditure” of £107.8m ($169.15m), compared with £32.2m ($50.53m) the previous year. This spend included its new watches emporium, which houses more than 35 brands, and the introduction of its “room of luxury” that showcases designer handbags and accessories at its Knightsbridge store.

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