Selfridges, despite an increase in sales and a rise in interest costs on debts, lost nearly £40m in the last year.
The main retail sales of the luxury department store rose by almost 30% to £843m in 2012, approaching their pre-pandemic levels of £853m.
The company attributes the improvement in performance to increased customer traffic at its shops on Oxford Street and Exchange Square, Manchester.
Selfridges Retail’s accounts, which cover the four UK stores as well as its website and mobile app, shows that the company has lost £38m in the twelve months leading up to January 2023.
Selfridges was forced to increase its distribution and interest payment costs after the cost spike. Last year, its interest expenses on lease liabilities were close to £100m. This was an increase of around 20pc from the previous 12 months.
Selfridges’ new Thai and Austrian owners booked loans via new trading and operating firms, accumulating more than £1.7bn in debt.
Reported in March the London branch Bangkok Bank provided a £1.7bn loan secured by the freehold of Selfridges flagship London store. Selfridges Exchange Square in Manchester was also secured with a large loan.
Selfridges’ trading company was worried about higher costs due to the debt. When owners incur more debt for the property side of their business, they often charge higher rent to the operating company.
Selfridges Retail’s accounts, published this week, said that rents would increase in stages from next year due to changes made to leases.
Selfridges’ distribution costs also increased by 6pc, to £314m. Selfridges’ administration costs increased by 13pc while its employee costs increased by 11pc.
The accounts were published weeks after Selfridges announced plans to cut costs by cutting jobs.
Andrew Keith, Selfridges’ managing director, told staff that the retailer must be “fit for future, aligned, and working the most efficiently” in an August letter.
He said: “Unfortunately, this will mean that some of our teams at head office, including some smaller teams who support our retail stores, will have to be resized or reshaped.”
After the consultation, it is expected that around 140 positions will be eliminated. According to recent filings, around 90 percent of the 3,127 employees are employed in the head office.
Selfridges continues to lose money, but its losses have decreased from £84m one year ago. Before the Covid-19 pandemic, the 114-year old company had made a profit in the year 2020 of £27m.
After almost 20 years of ownership, the billionaire Weston Family sold the luxury department store in 2021. Anne Pitcher, Selfridges’ long-time chief executive officer who served for 18 years, left the company as part of this deal.
Selfridges announced in August that the new owners of the company had planned to invest in the food and beauty halls.
Mr Keith was among a group retail chiefs who called on the Government to abolish the so-called “tourist tax” introduced by Rishi Sunak when he was the Chancellor.
In April, Keith told ministers that they should “listen to the business community about the true impact on the international visitor numbers as well as the wider tourism eco-system”. Selfridges has been contacted to comment.