Fayed takes £74m dividend despite fall in Harrods profits

Harrods, the London department store, has paid out a £74m dividend to its owner Mohamed al-Fayed, despite a steep fall in underlying profits.

The payout is a sharp increase on previous years and is believed to take the amount of cash the Fayed family has taken from the shop to £165m over the past five years. The latest dividend was said by the company to "reflect the shareholders' policy of centralising surplus funds".

Harrods Holdings Limited made pre-tax profits of just £200,000, before exceptional items, for the year ended 2 February, compared with a profit of £7.1m previously. Sales were up by £1m to £541m. Earnings were dented by increased distribution costs, together with a rate rise for the Knightsbridge site, and higher IT and restructuring costs.

Mr Fayed's finances have drawn attention after Harrods this year parted company with its auditors, PricewaterhouseCoopers and 10 directors resigned from the various Harrods boards over the past couple of years. Other parts of the Fayed business empire, including the Ritz hotel in Paris and Fulham football club, are taking heavy losses.

A spokesman for Harrods said: "Loans are well covered by prime property assets in premium areas and we are compliant with the terms of our banking arrangements."

Trading this financial year has improved, with sales for the first nine months up more than 5 per cent.