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 £۴۰m for Harvey Nichols, which has ۱,۲۰۰ employees and ۱۳ 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 ۱۰۰ 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 ۲۰۱۸ and has since closed about ۴۰ of its ۶۰ 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 ۱۸۳۱ as a linen shop, became the flag-bearer for ۱۹۹۰s 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.”
Julia Goddard, chief executive of Harvey Nichols, said: “I look forward to working closely with Frasers Group to build on the momentum already under way.”
Lindsay Hallam, senior managing director at FTI Consulting which acted as administrator to Harvey Nichols, said the deal secured more than ۱,۰۰۰ jobs and “provides a strong platform for its next chapter”.
The Knightsbridge store opened in ۱۸۸۹. In the last century it was owned by the Burton Group, the former owner of Debenhams, before Poon bought it in ۱۹۹۱ for £۵۳m and listed it on the London Stock Exchange in ۱۹۹۶.
In recent years the business has suffered from increased competition from Harrods and Selfridges as well as a host of online players, while its aspirational shoppers’ budgets have come under pressure from the cost of living crisis.
It reported a loss after tax of £۱۰۵m after writing off inter-company loans for the year to ۲۹ March ۲۰۲۵, according to accounts published over the weekend. The directors said the company was not a going concern, because it would run out of money within the next year and that it had no agreements for new funding.
The FTSE ۱۰۰ retailer Next had been interested in taking over the business but sources said it wanted only one or two of Harvey Nichols’s stores, so Ashley’s bid was seen as more attractive.
Ashley, the controlling shareholder in Frasers, told the Financial Times last Friday that Harvey Nichols was in a “death spiral” and that it would be a “huge challenge” to turn it around.
