UK luxury department store Fortnum & Mason’s profit surged 27 per cent in its latest fiscal year,  reaching £6.2 million and contributing to margin improvement of 0.8 percentage points on the previous year to 6.3 per cent.
Double digit sales growth across physical formats and the online channel contributed to greater profitability, with its newest store locations at St Pancras International and Heathrow Terminal 5 reporting sales growth of 19 per cent and 32 per cent respectively – benefiting from an international shopper audience and premium environment.
Much like its London department store rivals, the retailer has invested in the beauty department at its Piccadilly flagship, which was essential given the level of investment at Fenwick and Harvey Nichols and difficulty in differentiating a beauty offer without own brand or product exclusives. Fortnum & Mason is seeing dividends of its beauty hall investment already, achieving a 24 per cent rise in sales for the year.
The online channel continues to grow apace, doubling over the last three years. The platform now delivers to 128 countries, allowing Fortnum & Mason to serve a global customer base and leverage its British brand appeal. The depreciation of the pound will have benefited the retailer’s online sales since June, so expect another year of robust channel growth ahead.
Moreover, the continued willingness of international visitors in London looking to take advantage of better value luxury goods will positively impact its flagship store, namely its accessories and beauty departments, and own-brand food gifting ranges. Therefore, this run of double digit sales growth should continue into 2017 – so long as it continues to lean on the appeal and desirability of its heritage and portfolio of British brands.
 

• Honor Strachan is lead analyst with Verdict Retail.