What: Selfridges reports GBP 41.9 million loss amid declining revenue and IFRS 16 accounting impact, marking four consecutive years of losses totaling over GBP 400 million since 2020.

Why it is important: The persistent losses at Selfridges, exacerbated by accounting standards and property devaluation, reflect broader challenges facing UK department stores as the sector experiences continued revenue contraction and declining consumer engagement.

Luxury department store chain Selfridges has reported a GBP 41.9 million loss for the year ending February 2024, extending a streak of financial challenges that have accumulated to more than GBP 400 million in losses since its last profitable year in 2020. The company's revenue declined from GBP 843.7 million to GBP 834.9 million in the latest financial year, despite maintaining its presence across key locations in London, Birmingham, and Manchester. The losses are significantly influenced by the application of IFRS 16 accounting standards, which have led to increased depreciation and finance costs, particularly affecting the treatment of lease expenses. The board emphasizes that while these accounting changes impact reported profits, they do not affect actual cash flows. Meanwhile, the parent company, Cambridge Retail Group, which oversees additional retail operations in Ireland and the Netherlands, posted a substantial pre-tax loss of GBP 340.3 million, despite seeing its revenue surge to £1.5 billion.

IADS Notes: The recent GBP 41.9 million loss reported by Selfridges aligns with broader industry trends, as noted in January 2024 when the UK department store sector showed an average annual revenue contraction of 2.7% over five years. The impact of accounting standards, particularly IFRS 16, has significantly affected financial statements, as evidenced in October 2024 when Selfridges faced a GBP 638.6 million property devaluation due to increased depreciation and finance costs. This financial pressure coincides with declining consumer engagement, reflected in Selfridges' drop in consumer consideration from 30% in 2022 to 24% in July 2024, suggesting deeper structural challenges beyond accounting treatments.

Selfridges sinks further into the red as sales at luxury department store falter