Fortnum & Mason prospers with first new stores in 300 years

Fortnum & Mason, the luxury food and gift retailer, has reported its highest profits in its 307-year history with its first new stores in hundreds of years contributing to a doubling of profits.

The London store reported pre-tax profit rising 111 per cent year-on-year to £3.8m, with sales growing despite the weakening in international spending seen in other areas of the luxury retail industry.

"What we're doing is a much better job at being shopkeepers," said Ewan Venters chief executive, who joined from Selfridges in August 2012.

Better cost control had contributed to the increase in profits, he added.

Sales rose 14 per cent to £74.4m in the year to July 2014, building on a 10 per cent increase in the previous year in spite of weaker spending from tourists, including from the Middle East.

"There was plenty of volume but we saw them spend on average a little less," said Mr Venters.

However, demand from China remained strong, he added, despite the effect of anti-corruption legislation and concerns about economic growth in China, which have slowed sales growth for luxury retailers like Burberry.

"Tea and food is seen a very appropriate cultural gift for the Chinese to give businesspeople and falls well under the threshold of value," he said, referring to anti-corruption legislation.

Sales of the store's trademark gift hampers rose 18 per cent as the retailer expanded beyond its flagship store in Piccadilly for the first time in more than 300 years.

In November 2013, it opened a store at the new St Pancras International Station and in March this year opened a licensed store in Dubai.

Last week, it opened a store at Heathrow airport's Terminal 5 and, although the expansion would continue, said Mr Venters, "you won't see dozens and dozens of Fortnums".

The results are a contrast to the store's performance in 2011-12 when an IT glitch delayed the delivery of Christmas hampers and the company reported profits of £300,000.

The last time the store reported record profits was at the turn of the century, before it was taken private by the Canadian Weston family in 2001.

Mr Venters said the store was confident about the Christmas trading period, which accounts for over 70 per cent of its annual profits but added that the store had begun to see sales spread out throughout the year as the proportion of UK customers increased.

"We're little by little getting back to the point where people are using us a regular shop for their luxury grocery items and their gifting," he said.

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