Frasers Group eyes Harvey Nichols deal as Ashley warns of mounting turnaround risks

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Frasers eyes Harvey Nichols deal

Highlights

Frasers Group aims to acquire Harvey Nichols for under £40mn, below the £50mn–£60mn turnaround funding figure previously cited to bidders.
Harvey Nichols faces steep challenges with £141.2mn in pre-tax losses over five years, high overheads, and a subdued luxury retail market impacting profitability.
Mike Ashley warns store maintenance and business rates are pressuring UK department stores, with Frasers planning selective rebranding and emphasizing Knightsbridge and Edinburgh sites.

Auction dynamics and turnaround demands

As reported by Financial Times, Ashley says Frasers Group believes it can offer a higher price for Harvey Nichols than rival bidder Next because the chain is a more natural fit within its retail portfolio.

The Sports Direct founder says he is unlikely to write a very large cheque, adding that buyers must account for future losses as they assess the business. He says Harvey Nichols could sell for less than £40mn, even though interested parties were previously told they would need to commit between £50mn and £60mn to fund a turnaround plan.

Sir Dickson Poon appointed FTI Consulting in June to find a buyer for Harvey Nichols after several years of losses. Final bids were due on Wednesday night, and discussions are still ongoing on Thursday, according to a person close to the process. A source close to the process says Poon is likely to have to inject cash into any deal to make the retailer more attractive to buyers.

Separately, Hong Kong's Market Misconduct Tribunal last week found Poon culpable of insider dealing in shares of Dickson Concepts, a company he founded. Dickson Concepts says both the company and Poon are very disappointed with the ruling and are reviewing the report.

Store strategy and pressure on luxury retail

If Frasers prevails, Ashley says he would be inclined to keep Harvey Nichols' flagship Knightsbridge store and its Edinburgh site trading under the Harvey Nichols brand. He says some other stores could be rebranded as House of Fraser or Flannels, both owned by Frasers, while the chain also has stores in Leeds, Birmingham, Manchester, Dublin and Bristol.

Ashley says department store properties are expensive to maintain and notes that when he bought House of Fraser for £90mn in 2018, the chain had about 60 stores, compared with 20 now. He says high business rates and refurbishment costs make it difficult to generate returns, underscoring the pressure facing large-format retail in the UK.

Harvey Nichols has accumulated pre-tax losses of £141.2mn over the past five years. The business is also contending with a subdued luxury market and the end of tax-free shopping for tourists, which has reduced London's appeal to big spenders, while its latest accounts are four months overdue.

The prospect of a Frasers takeover is creating nervousness among some staff and suppliers, according to people familiar with the matter, after Frasers bought Matchesfashion in 2024 and put it into administration three months later. Harvey Nichols says it remains focused on its transformation strategy and that the refurbishment of its Knightsbridge flagship is showing positive early signs of growth, while Next declines to comment.

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