Former Newcastle United owner Mike Ashley is closing in on a deal to rescue troubled luxury department store Harvey Nichols.
The Sports Direct tycoon has emerged as the frontrunner to acquire the retailer after high street chain Next reportedly pulled out of discussions. Talk of a transaction with Ashley's Frasers Group, which has expanded its retail portfolio with luxury brands such as Hugo Boss and Gieves & Hawkes, suggests an agreement could be announced as soon as this week.
Ashley stated last week that Harvey Nichols is "in a death spiral" and noted that he expects the business to be sold for less than £40 million. The company employs 1,200 staff and operates UK branches in Birmingham, Bristol, Edinburgh, Manchester, and Leeds, alongside international locations in Dublin, Riyadh, Dubai, Hong Kong, and Kuwait.
The store warned it will shut within a year if it does not find a buyer or cash injection after reporting annual losses of £178 million. Best-known for its sprawling flagship location in Knightsbridge, London, which once boasted Princess Diana as a customer, Harvey Nichols has failed to turn a profit for five years as it has been accused of losing its way. It has been hit by a downturn in tourism spending following the Covid pandemic and the removal of a VAT-free shopping scheme.
Lynne Franks, the public relations guru who worked for Harvey Nichols in its heyday and inspired Jennifer Saunders' character Eddy in Absolutely Fabulous, urged Ashley to contact her to help revive the business. "It's tragic to see how it has fizzled out," Franks told The Mail. "I don't know why I would be going there now or what I would be trying to buy."
Store identity and marketing struggles
Franks argued that the group has lost sight of its identity under current management. "They just haven't got the marketing right and the story right," she said. "I think [a comeback] can be done if they're smart and are very clear who their market is."
Three years ago, in a piece for the Mail, Franks urged the business to recruit famous faces such as Victoria Beckham and Gwyneth Paltrow to inject excitement back into the brand, but did not hear anything. "It's arrogance," she said. "They're in a mess."
The business was previously transformed by Mary Portas, the store's young creative director, who bartered a deal with Absolutely Fabulous, where its brash and boozy fashionista characters often mentioned the store and wore its clothes. Portas turned it into a trendy destination for the fashion-forward with eye-catching window displays. Franks noted the business is at its best when it is "uniquely creative," whether through striking window dressings or hosting glamorous events such as fashion shows or industry parties.
Potential sale options and future outlook
Owner Sir Dickson Poon put the business up for sale in June, and talks to sell part or all of the firm are now at a crunch stage. Sale talk has also sparked rumors that a private equity bidder could buy the business and shut shops.
Franks expressed doubt about private equity ownership in retail. "A lot of the time that I see a private equity company moving into retail or fashion, they don't seem to last," Franks added. "They don't know what they're doing."
Despite concerns over Sports Direct owning a luxury symbol, Franks said an Ashley acquisition is "not the beginning of the end." "He is a professional retailer, he is making a profit - which is more than Harvey Nicks' are doing now," she said. "He should give me a call."
Franks expects bidders will be looking at how they can move some of the business to an online marketplace, like former high street chain Debenhams. "Retail is very, very tough, it's very competitive," she said. "Outside of London, that market [for its stores] did tend to be footballers' wealthy wives - they have lost that I guess."
"The flagship has got to improve and become more unique with brands and marketing - it needs to get exciting," Franks added. "Make it fun, make people want to go there as a destination. Let's see what happens."
