Frasers buys Harvey Nichols out of administration, adding 13 stores

Frasers Group acquired Harvey Nichols out of administration Thursday for an undisclosed sum, adding the 195-year-old luxury department store chain with 13 stores and 1,200 staff to Mike Ashley's retail empire.

"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," Michael Murray, chief executive of Frasers Group, said.

Harvey Nichols reported a loss after tax of £105 million after writing off inter-company loans for the year to 29 March 2025, with directors warning the company was not a going concern. Revenue fell 5 percent to £204.8 million in the year to March 2024, while pre-tax losses widened to £34 million. The chain has recorded five consecutive years of losses.

The acquisition consolidates Frasers' position in premium retail, following its 2018 purchase of House of Fraser and stakes in Hugo Boss and Mulberry. Frasers said it will review and rationalize the store portfolio, organizational structure, operating model, and cost base, with the Dublin store's future still under discussion.

Frasers is acquiring the London, Edinburgh, Birmingham, Leeds, and Manchester stores, while discussions over the Dublin shop are ongoing. Franchise agreements for overseas locations in Riyadh, Dubai, Doha, Kuwait, and two Hong Kong outlets will continue under the deal. The Harvey Nichols restaurant at the Oxo Tower in London is being sold separately.

The deal follows weeks of negotiations between Frasers and FTI Consulting, which advised Harvey Nichols and was lined up to act as administrator. Frasers has offered a 12-month commitment to preserve London head office positions and agreed to settle outstanding payments owed to brand partners, following supplier concerns during its acquisition of Matchesfashion in 2024, which entered administration months after the deal.

Ashley last week described Harvey Nichols as being in a "death spiral" and suggested the business might fetch less than £40 million, given the investment required to turn it around. Prospective buyers were told the business requires up to £60 million in funding to support an operational transformation across its stores.

The FTSE 100 retailer Next had been interested in taking over the business but was seeking only one or two of Harvey Nichols' stores, making Ashley's bid more attractive to administrators.

Harvey Nichols, founded in 1831 as a linen shop, became a flag-bearer for 1990s chic and was put up for sale by Poon after failing to make a profit since the coronavirus pandemic locked out big-spending foreign tourists. The Knightsbridge store opened in 1889 and was owned by the Burton Group before Poon bought it in 1991 for £53 million and listed it on the London Stock Exchange in 1996.

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, driving sustainable growth through greater operational efficiency and enhanced infrastructure, and continued investment into customer experiences to ensure Harvey Nichols remains a distinct and relevant luxury destination for both our customers and brands."

The acquisition adds another high-profile name to Ashley's retail empire, which has previously snapped up businesses including House of Fraser, Jack Wills, and Gieves & Hawkes. Frasers has been building its interests in luxury fashion with the Flannels chain and large stakes in Hugo Boss and Mulberry.

The deal shows the ongoing consolidation in UK department store retail, where Harvey Nichols has suffered from increased competition from Harrods and Selfridges as well as online players, while aspirational shoppers' budgets have come under pressure from the cost of living crisis.

This article is for informational purposes only and does not constitute investment advice.