Frasers Group has entered the sales process for the luxury department store Harvey Nichols, joining other interested parties, including NEXT, despite concern among some of the luxury department store’s brand partners.
Frasers Group, the British retail group behind Sports Direct and Flannels, wrote to Harvey Nichols requesting admission to the sales process, according to Sky News.
In a memo sent to suppliers on Tuesday, a senior Harvey Nichols executive said that the department store was now “obliged to allow Frasers Group to participate in the process alongside the other interested parties”.
It added: “This forms part of ensuring a robust and competitive process as we seek the right partner to support Harvey Nichols’ next phase of growth.
“We continue to be encouraged by the level of interest in the business, with multiple parties engaged from both the UK and several key international markets.”
Sky News reported that, over the last two weeks, Harvey Nichols had been reassuring brand partners that Frasers Group would not be part of the discussions, even though the group had previously been in discussions to buy Harvey Nichols’ regional stores.
Why the privately owned company now felt it had to admit Frasers into the process remains unclear.
Frasers joins NEXT and international buyers in the sales bid
Earlier this month, it had already emerged that NEXT was an interested party in the department store, although no formal offer has been confirmed.Â
Sky News had reported that it was not clear whether NEXT would carry on operating the network of regional Harvey Nichols stores after a takeover, or whether it would instead concentrate on the brand and other intellectual property assets, as it did with its Russell & Bromley deal earlier this year.
In addition to NEXT, likely buyers are expected to include wealthy individuals from Asia and the Middle East, sources told Sky News, with initial bids expected later this month.
The business is expected to change hands in the coming months.
Luxury suppliers raise concerns around Frasers’ entry
Several brand owners have raised concerns with Sky News about a possible acquisition by the group, which also owns House of Fraser and has expanded its premium fashion presence through Flannels.
Harvey Nichols currently stocks hundreds of labels, including Balmain, Cartier, Max Mara and Polo Ralph Lauren. For those suppliers, the sale raises questions about how a new owner would manage Harvey Nichols’ luxury positioning and existing brand relationships.
Frasers and NEXT would bring different acquisition records. Frasers has pursued stakes and takeover opportunities across fashion and footwear, while NEXT has assembled a portfolio that includes Reiss, FatFace, Joules and Russell & Bromley.
Losses increase pressure on the store estate
Harvey Nichols is owned by Sir Dickson Poon, who acquired the business for about £53 million in 1991.
The sale follows a long stretch of weakening performance. In its latest financial accounts, Harvey Nichols reported revenue of £204.8 million for the 12 months to 31 March 2024, down 5% from a year earlier. Pre-tax losses climbed to £34 million, making it a fifth straight year of losses.
The business has about 1,200 employees in the UK and runs seven stores in the UK and Ireland, with large-format sites in London, Edinburgh, Birmingham, Leeds and Manchester, plus smaller-format branches in Bristol and Dublin.
Internationally, it operates six large-format stores in Riyadh, Doha, Dubai, Hong Kong and Kuwait.
The softer luxury goods market, together with the ending of VAT-free shopping for tourists after Brexit, has been pointed to as a major reason for the prolonged losses.
Turnaround efforts already underway
Harvey Nichols has continued turnaround work during the ownership review. CEO Julia Goddard, who was appointed two years ago, has overseen a multimillion-pound refurbishment of the Knightsbridge flagship, including the installation of a new wellness destination on the fourth floor that combines fitness, beauty treatments, nutrition and athleisure retail in May.Â
At the time of opening, in May, Lucy McPhail, Beauty Director at Harvey Nichols, said: “The launch of the new fourth floor marks an important step in the continued evolution of our Knightsbridge flagship.”
Goddard has also led investment in the retailer’s digital operations, with internal key performance indicators said to be “moving in the right direction” following the initiatives.
Meanwhile, the retailer recently strengthened its senior leadership team with the appointment of Shaun Donnelly to Buying Director for Non Apparel & Menswear.Â
Ownership historyÂ
Sir Dickson Poon’s Dickson Concepts International bought Harvey Nichols from Burton Group in 1991 for £53 million. The company listed on the London Stock Exchange in 1996 before being taken private again six years later.
Sir Dickson is no longer actively involved in running the group, having stepped down from the Harvey Nichols board and his other European directorships.
In June last year, TheIndustry.fashion took an in-depth look at Harvey Nichols’ transformation plans, featuring exclusive commentary on the challenges it faces and expert insights into how it might successfully navigate its transformation.