Joseph Wan, the chief executive of Harvey Nichols, has warned the worst of the economic crisis will hit in the second half of 2009.
In an interview with US trade publication WWD.com Wan said: “We haven’t seen the worst of this crisis; it will, perhaps, come in the second half of 2009, and then we can take stock.”
Harvey Nichols is expected to see operating profits fall 44% to £10 million the 2008/2009 financial year. Group sales are also expected to fall by between 4% and 5% to between £225 million and £230m over the period.
“We haven’t seen the worst of this crisis; it will, perhaps, come in the second half of 2009, and then we can take stock.”
Joseph Wan, chief executive, Harvey Nichols
Wan said that he expected sales to shrink a further 2% to 3% in the 2009/2010 year, and that profits were likely to be flat at £10m.
Wan also told WWD.com that he had made significant changes to the buying strategy, slashing the open to buy budget last autumn by 25%. He has also instructed the Harvey Nichols buying team not to spend on “experiments” or on totally new brands but instead to focus on sales densities and the best-performing labels.
He said buyers were also working with designer labels such as Giles to introduce more accessible price points to help the department store through the recession.
Wan added that his eventual goal was to launch a private label Harvey Nichols collection but added that the luxury department store group lacked the scale to begin such a project at the present time. “We have too few Harvey Nichols doors right not to sell the private label goods. We have 12 stores right now but 15 is the magic number that would satisfy our minimum requirements. It’s a strategy we continue to pursue.
Wan warned that the current recession has changed the landscape of luxury retailing for good. He said: “The easy money and available credit are no longer there. We’ll revert more to the old days when people bought real luxury only when they could afford it - as a treat or an investment.”