Frasers billionaire bought Harvey Nichols and increased Hugo Boss stake despite tough times for high-end stores
What billionaire doesn’t love to splash the cash on a luxury item? Some may buy watches or yachts, but Sports Direct founder Mike Ashley has been snapping up entire brands.
Harvey Nichols is the latest bauble to drop into his shopping basket after his company bought the Knightsbridge department store out of administration earlier this month. It sits beside a large slice of Hugo Boss, a chunk of Mulberry, a snippet of Burberry, the remains of Agent Provocateur and the entire Flannels and House of Fraser chains.
After a rough few years for the sellers of luxury goods – as the cost of living crisis has crunched the spare cash aspirational consumers might have had available for the occasional treat, and Asian and Middle Eastern shoppers have become less inclined to travel to Europe – Ashley’s buying spree might seem out of sync.
However, the string of acquisitions closely match the entrepreneur’s established modus operandi – picking up bargains during tough times and finding the value where he can.
Sports Direct, now part of Ashley’s Frasers Group, built its business by snapping up struggling independent sporting goods chains and bumped up its profits by getting the UK rights to ailing sportswear brands – from Head to Slazenger – and using them to decorate its own products.
Since first buying a stake in Flannels in 2012, then a menswear store in Knutsford, Cheshire, Ashley has been slowly building a luxury portfolio.
The strategy has had its ups and downs. Flannels has expanded to about 75 stores and now sells brands from Gucci to Stone Island to Maison Margiela. This week, Ashley celebrated lifting his stake in the German label Hugo Boss to 48%, just short of taking full control, despite opposition from the company’s board.
The Harvey Nichols deal is a classic tactic to gain access to intransigent brands, adding lustre to the portfolio that could make some designer marques previously shy of engaging with the king of discount trainers sit up.
Ashley is likely to take a pragmatic approach to the wider Harvey Nichols estate, having said he intends to convert at least some of the five UK outposts outside London to the Flannels brand.
However, labels pondering whether to continue supplying the department store chain might do well to consider the events at the luxury online fashion seller Matchesfashion. Frasers bought the business for £52m at the end of 2023, only to place it into administration months later, leaving millions of pounds owed to designer brands.
House of Fraser is another cautionary tale. On buying the House of Fraser chain of 60 department stores out of administration almost exactly eight years ago, he set a mission to become “the Harrods of the high street”. Today there are just five stores left trading under that name.
There are another 15 stores badged as just Frasers, some of which are converted department stores while others are somewhat smaller sites. The Frasers name is also being used on a Luton shopping mall in the group’s property portfolio, which contains a House of Fraser discount outlet.
Such a confusing brand story is unlikely to entice large international labels to engage. Even the Flannels chain, Frasers said in its latest annual results published in July, was “now near complete”, indicating it did not intend to add many more stores.
Sales at the group’s “premium lifestyle” division, which includes House of Fraser and Jack Wills, fell almost 7%, while profits fell by almost £10m to £147.6m. Frasers said this included a rise in sales at Flannels, but gave no figures, so it was unclear if that was driven by adding new stores.
