Harrods more than doubled the pay of its managing director, Michael Ward, last year to £2.3m, even as the company collected almost £6m in government support under the furlough scheme.
Ward, understood to be the highest-paid director at the upmarket department store in Knightsbridge, west London, increased his package from £1m the previous year after Harrods returned to profit as pandemic restrictions eased.
Harrods Limited, the company that operates the London store, made a pretax profit of £51m in the year to the end of January 2022 after a loss of £68m a year earlier. Sales soared by 35% to £582m on the easing of lockdown restrictions and the return of international travellers, including those from the Middle East.
The department store said it had benefited from furlough payments of £5.8m in the 12 months to 29 January, although that was considerably lower than the £23.5m in the prior year. The reduction in support came as high street lockdowns reduced and the number of staff at Harrods Limited fell by more than 400 to 3,511.
The retailer also increased internal royalty payments from £23.2m to £33.5m. The payments cover interest on an inter-company loan. No dividend payments were made in the year to Harrods’ owner the Qatar Investment Authority sovereign wealth fund, which has a property portfolio in London that includes the Shard skyscraper and parts of the Olympic Village in Stratford.
The accounts reveal Harrods has a £620m loan that matures in October next year after securing an 18-month extension. Ward told the Times, which first reported Harrods’ profit figures, that he was comfortable the retailer had sufficient cashflow to cover higher interest rates.
Ward told the Sunday Times the business was on track to bounce back this year to the sales of about £870m achieved pre-pandemic.
A spokesperson for Harrods said it was “extremely grateful to have received support from the government” as its store closed for 10 weeks between January and April 2021.
It said the highest-paid director’s salary increase reflected a “substantial pay reduction in 2020” as well as taking into account that “Harrods outperformed its targets and predictions, and significantly outperformed the wider luxury industry”.
• This article was amended on 1 November 2022. The internal royalty payments of £33.5m paid by Harrods Limited cover interest on an inter-company loan, not interest on a loan from Harrods’ owners, the Qatar Investment Authority sovereign wealth fund, as an earlier version said.