Mike Ashley’s Frasers Group has joined the race to acquire Harvey Nichols, setting up a potential bidding battle with Next for the loss-making luxury department store.
Harvey Nichols told brand partners this week that it had been required to allow Frasers Group to participate in the sale process alongside other prospective buyers.
In a memo first reported by Sky News, the retailer said the situation surrounding the auction had “evolved”, despite concerns reportedly raised by several luxury brands stocked by the department store.
The development marks a fresh twist in the sale of Harvey Nichols, which has been owned by Hong Kong businessman Sir Dickson Poon since he acquired the company for around £53m in 1991.
Next has emerged as one of the frontrunners to buy the retailer, while parties from Turkey, Qatar and the US are also understood to have expressed an interest.
Formal bids could begin arriving this week, with FTI Consulting and international strategic adviser Derya Akyuz working on the process.
Frasers Group, which owns Sports Direct, Flannels and House of Fraser, has repeatedly sought to expand its presence in the premium and luxury fashion market.
The retail group has become known for building stakes in companies before pressing management teams for strategic changes or launching takeover approaches. It recently made offers involving German fashion brand Hugo Boss and Australian footwear retailer Accent Group, although both approaches were rejected.
Frasers was also reported earlier this year to be considering acquiring some of Harvey Nichols’ regional stores, but no deal was agreed.
Harvey Nichols has endured several difficult years as weaker luxury demand, falling footfall and the removal of tax-free shopping for international visitors weighed on its performance.
The retailer’s pre-tax losses widened to £35.3m in the year to 30 March 2024, compared with £21.3m the previous year. Revenue declined from £216.6m to £204.9m.
Its expansion beyond London, which included stores in Birmingham, Manchester, Leeds and Dublin, has also struggled to produce the returns initially expected.
Chief executive Julia Goddard is attempting to revive the retailer through a multimillion-pound refurbishment of its flagship Knightsbridge store. Around 75 new brands have been introduced at the location since October as part of efforts to refresh its offer and attract more shoppers.
Harvey Nichols rose to prominence during the 1990s, helped by its appearances in BBC comedy Absolutely Fabulous and its popularity among high-profile shoppers including Diana, Princess of Wales.
The arrival of Frasers Group into the auction is likely to intensify competition for the business, although concerns among luxury brand partners could complicate any potential takeover by Ashley’s retail empire.
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