Paul Smith executive chairman Ewan Venters has questioned the ethics of Frasers Group’s takeover of Harvey Nichols, as suppliers face recovering just a fraction of the money they are owed.
Venters hit out at the use of a pre-pack administration to sell the luxury department store to the Mike Ashley-controlled retail group for £43.3m last month.
“I personally find this whole thing about pre-pack administrations just dubious in terms of ethics and the way business gets done,” he told the BBC’s Big Boss Interview podcast.
Harvey Nichols collapsed into administration on 13 August owing creditors £270.5m, before being immediately acquired by the Sports Direct and Flannels owner.
Early estimates from administrators suggest unsecured creditors will receive less than 15 per cent of what they are owed.
Paul Smith is among the suppliers caught up in the collapse, with the fashion brand owed almost £97,000. Other creditors include Victoria Beckham, Jimmy Choo, Canada Goose, Jo Malone and Estée Lauder.
Venters said: “I find it all a bit odd and I don’t think that’s a kind way of doing business.”
However, he acknowledged that the Frasers deal may ultimately have prevented Harvey Nichols from disappearing altogether.
“On the other hand, maybe Harvey Nichols was about to go to the wall and maybe Mike and his team will hold that brand and keep it going. But let’s see.”
Frasers acquired Harvey Nichols’ six UK stores, ecommerce operations, inventory and international franchise agreements, with more than 1,000 employees transferring to the retail giant.
The group has warned that the loss-making luxury retailer will require “significant restructuring”, including a review of its store estate, organisational structure and cost base as it seeks to return the business to sustainable growth.
Frasers chief executive Michael Murray previously described Harvey Nichols as an “iconic British institution with significant potential”, but warned that its turnaround would require “tough choices”.
The deal forms part of Frasers’ continued push into premium and luxury retail. The group has also increased its holding in Hugo Boss to almost 48 per cent, while it has built a stake in Burberry.
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