Selfridges has warned that there was potential for a “severe but plausible” scenario which could see its local banking covenants breached in the UK.
Owners of Selfridges, the Weston Family, have warned they may need to add extra money into its European department stores businesses, including Selfridges, Brown Thomas, Arnotts, and De Bijenkorf.
In its latest filed accounts by Selfridges Holdings Europe Limited (SHEL Holdings), the company warned it had faced a devastating drop in tourists, the end of previous tax-free shopping regimes in the UK for tourists and store closures during lockdowns.
The accounts cover financial year February 2019 to February 2020, reporting that revenue rose to £1.522 billion from £1.452 billion.
Pre-tax profit however fell to £37.8 million from £103.3 million, with net profit also falling to £31.1 million from £82.2 million.
The company reaffirmed it remains confident on renegotiating with its covenants, but said parent company (Wittington Investments) has committed to providing the business with financial support in the “unlikely event” it is unable to secure looser terms.
Last month, Selfridges Managing Director Anne Pitcher, said it was able to be “resilient” in the face of the pandemic as a result of investing in its online capabilities and digital ways of working in 2019.