Fortnum & Mason has reported a slump in annual profits after an IT meltdown in the run up to Christmas 2011 meant many of its iconic hampers failed to reach customers in time.

The Piccadilly-based food emporium said operating profits were down 66% to £350,000 for the year to 15 July, according to accounts filed last week on Companies House. 

Profits fell despite an 8% increase in sales to £59.3m.  

Fortnum & Mason attributed the mismatch between profits and sales to “issues associated with the opening of a new distribution centre and implementation of new systems.”

Many of the grocer’s customers did not receive the hampers they ordered in time for Christmas last year because of an IT breakdown at the new Cambridgeshire-based warehouse.

The company was forced to draft in 100 extra customer service staff, including the managing director Beverly Aspinall, to deal with the backlog.

It said profitability did recover in the second half of the financial year once the issues were resolved.

Fortnum & Mason had a much better Christmas 2012. Earlier this month, it reported sales in the four weeks to the end of December were up 17.3%.

“We had a splendid Christmas – the best in our long history for sales but also in terms of the atmosphere in store which is a huge tribute to the effort of all the team,” said new CEO Ewan Venters.