Mike Ashley’s Frasers snaps up Harvey Nichols
Mike Ashley’s Frasers Group has bought Harvey Nichols, plucking the struggling luxury department store from the jaws of insolvency.
The group, which also owns Sports Direct and Flannels, has acquired each of the chain’s stores, excluding the site in Dublin, from FTI Consulting through a pre-pack administration process.
Frasers’ acquisition of Harvey Nichols marks the latest step in its push into luxury fashion, as it looks to expand beyond its roots in bargain sportswear.
The firm, which was founded by billionaire Mike Ashley, has prevailed over competitors including FTSE 100 retail giant Next, which had also been involved in the auction process.
The deal will secure the jobs of more than 1,000 employees, though Harvey Nichols employs around 1,200 in total, suggesting a number of job losses will be triggered. Frasers will also acquire the group’s online business and existing stock.
Frasers said it will need to commit to “significant restructuring” of the department store group, which has posted five successive years of losses after succumbing to intense competition from rivals Harrods and Selfridges.
Department store in ‘death spiral’
Ahead of the deal, Ashley said that Harvey Nichols – which had soared to fame through its association with the 1990s sitcom Absolutely Fabulous – had fallen into a “death spiral”.
He told the Financial Times that he expected the department store chain to be sold for less than £40m. “I don’t think I’ll be writing a huge cheque, because you’ve got to think about the future losses,” he had said.
Earlier this week, directors of Knightsbridge-headquartered Harvey Nichols warned that the business would collapse if it did not find a buyer or secure emergency funding.
Announcing the deal on Thursday, Frasers chief executive Michael Murray 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.”
Frasers in luxury push
Frasers has made a number of plays for luxury brands in recent years, including a failed bid for control of up-market bagmaker Mulberry.
Last month, the group tabled a £1.7bn bid for German fashion house Hugo Boss. Frasers later upped its stake in the firm to 37 per cent, triggering a mandatory offer for all of the shares it does not already own.
Frasers said its acquisition of Harvey Nichols will build on the group’s “elevation strategy, strengthening its luxury positioning”.
Julia Goddard, chief executive of Harvey Nichols, said: “Today marks an important milestone for Harvey Nichols and provides a strong platform for the next phase of the business’s evolution under the ownership of Frasers Group.
“Over the past year, we have made significant progress in repositioning this iconic business, investing in our flagship store, broadening our customer proposition, and strengthening the brand DNA.”