Luxury department store experiences 72% fall in profits after seasonal orders were hit by techinical problems in 2011
Fortnum & Mason’s profits plummeted by 72% after the Queen’s favourite retailer was forced to pay hundreds of thousands of pounds in compensation for failing to deliver festive hampers in time for Christmas Day in 2011.
Fortnum’s pre-tax profits collapsed from £1.1m to £313,000 in the year to July 2012 after embarrassing technical “glitches” paralysed the Piccadilly emporium’s delivery system.
Wealthy families and companies – who favour Fortnum hampers as corporate Christmas gifts – were left waiting for the hampers, costing up to £5,000 each and including Christmas puddings with goldleaf almonds, until weeks after Christmas 2011.
The luxury retailer, which traces its roots back to 1707, declined to state how much it paid in compensation but a source close to the company said much of the £800,000 drop in profits was due to the payouts.
A Fortnum spokesman said the company wrote to every customer to apologise for the failed deliveries, but acknowledged that some customers refused to shop with Fortnum again despite the compensation.
“Glitches with the new warehouse systems installed in summer/autumn 2011 led to the delays to hamper deliveries that year,” the spokesman said.
“The firm has invested £3m in new systems and training which are now working efficiently.”
The spokesman said Fortnum did not believe that publicity surrounding its occupation by UK Uncut protesters against claims of corporate tax avoidance negatively affected either trading or profits. Fortnum’s sales rose by 9% over the year to 15 July 2012 to £59.9m.
The accounts reveal that Beverly Aspinall, Fortnum’s former managing director who left the firm shortly after the hamper fiasco, received a £360,000 payoff.
Aspinall, who said joining Fortnum’s in 2005 was like winning a “dream ticket”, left to work at Aspinalls, a wealth management company run by her husband David Aspinall.