Billionaire Mike Ashley has described Harvey Nichols as being in a “death spiral” and said turning the luxury department store around would be a “huge challenge”, as he emerges as an unlikely buyer.
Interest in Harvey Nichols
The Sports Direct tycoon, known for rescuing struggling retailers, has indicated his interest in acquiring Harvey Nichols after its current owner put it up for sale. The store, famous for its role in the BBC sitcom Absolutely Fabulous, has suffered several years of losses.
Besides its flagship branch in London’s Knightsbridge, Harvey Nichols operates stores in Leeds, Birmingham, Edinburgh, Manchester, Dublin and Bristol. Two years ago, it announced a major operational shake-up that led to dozens of job cuts at its head office.
Competition and Price Expectations
Ashley’s Frasers Group is seen as a possible buyer, along with fashion giant Next, according to reports. In an interview with the Financial Times, Ashley said he expected Harvey Nichols to sell for less than £40 million.
“We are more likely to overpay . . . It’s more of a natural fit so we can pay more,” he told the FT, while adding he “wouldn’t be crying a river” if Frasers lost the auction, and “I don’t think Next would be either”. He added: “I don’t think I’ll be writing a huge cheque, because you’ve got to think about the future losses. If it was a little bit tough before, it is in a death spiral now.”
Potential Rebranding
If Frasers were to succeed, Ashley said he would likely keep the Knightsbridge and Edinburgh stores trading under the Harvey Nichols brand. However, he indicated some other stores could be rebranded as House of Fraser or Flannels, both owned by Frasers.
Ashley noted the high cost of maintaining department store buildings, referencing the reduction of House of Fraser stores from about 60 when he bought it in 2018 to just 20 now. “These department store buildings are so expensive to maintain,” he told the FT. “If even John Lewis is struggling, it shows how tough it is. I don’t buy things to close them down. I don’t lose money for no reason.”
