Frasers Group acquires majority of upmarket retailer’s sites from the administrators
The owner of Sports Direct has bought Harvey Nichols out of administration after the upmarket department store chain warned it could run out of money if it did not find new funding.
Mike Ashley’s Frasers Group said on Thursday it had bought the chain, which is headquartered at its store in Knightsbridge, for an undisclosed sum on the day it was put into administration. Sources said he had paid about £40m for Harvey Nichols, which has 1,200 employees and 13 stores.
These consist of five large stores – in London, Edinburgh, Birmingham, Leeds and Manchester – and a smaller one in Bristol plus outlets in Dublin, Riyadh, Dubai, Doha, Kuwait and two in Hong Kong.
Frasers said it was acquiring the London, Edinburgh, Birmingham, Leeds, Bristol and Manchester stores. Discussions over the future of the Dublin shop were “ongoing” but Frasers said it had already bought certain stock and fixtures and “continues to support” trading there. The franchise agreements for the overseas stores will continue under the deal.
Harvey Nichols’s restaurant in the Oxo Tower in London is not included in the deal, and is being sold off separately. The administrator, FTI Consulting, said a sale was being finalised that would preserve 100 jobs and the ongoing operation of the business.
Frasers said in a statement: “Significant restructuring and integration of Harvey Nichols into the Frasers Group ecosystem will be required to create a sustainable business for the future, including a review and rationalisation of the store portfolio, organisational structure, operating model and cost base.”
Frasers bought the House of Fraser department store chain out of administration in 2018 and has since closed about 40 of its 60 stores. The group has been building its interests in luxury fashion with the Flannels chain and large stakes in the German brand Hugo Boss and the British handbag maker Mulberry.
Ashley has bought a series of struggling premium brands in recent years after starting out with a single sports shop. He has said he would keep Harvey Nichols’s Knightsbridge and Edinburgh stores, but rebrand the four other UK stores – in Birmingham, Leeds, Manchester and Bristol – as House of Fraser or Flannels.
The veteran retail analyst Richard Hyman said: “We can be certain that Harvey Nichols won’t be the same, because being the way it was has racked up huge losses and that won’t be tolerated by Mike Ashley.”
It is not clear if Ashley plans to keep the entire Knightsbridge flagship store as a retail and restaurants operation under the Harvey Nichols brand long-term, or if he might redevelop it bringing in some of his other brands such as Sports Direct, Flannels or gyms and other partners, such as a hotel, to fill the space more profitably.
Hyman teased: “Sports Direct might go well on that corner”, pointing to Lillywhites, the former department store on London’s Piccadilly, which Ashley has owned for decades and is now in effect a Sports Direct outlet.
Harvey Nichols, which was founded in 1831 as a linen shop, became the flag-bearer for 1990s chic highlighted in popular culture by regular mentions in TV sitcom Absolutely Fabulous. It was put up for sale by its long-term owner Dickson Poon after failing to make a profit since the coronavirus pandemic locked out big-spending foreign tourists.
The Frasers Group chief executive, Michael Murray – who is Ashley’s son-in-law – said: “Harvey Nichols is an iconic British institution with significant potential, but it is clear meaningful change is needed.
“The turnaround will require tough choices, and we are prepared to make those decisions, even if that means a smaller business in the near term, to create a stronger and more sustainable Harvey Nichols for the long term.”