Mike Ashley buys Harvey Nichols and saves department store from collapse

Mike Ashley buys Harvey Nichols and saves department store from collapse - See more This is Money on Google - save us as a Preferred Source Mike Ashley's Frasers Group has snapped up Harvey Nichols for £40m after the luxury department store warned it could run out of money if it did not find a buyer. The tycoon has purchased the 195-year-old retailer through an administration process, providing relief to some 1,200 workers. Staff at Harvey Nichols have been facing uncertainty since owner Sir Dickson Poon put the business up for sale in June. Frasers will buy six of its department stores – including the flagship Knightsbridge location – in the UK as well as its online and international franchise businesses. The group has also purchased assets at the Harvey Nichols' Dublin location, including stock and store fixtures, but said discussions in relation to the business are ongoing. Frasers did not reveal how much it paid but the Financial Times reported it was around £40m. Frasers chief executive Michael Murray warned the deal would require 'tough choices', adding: 'We are prepared to make those decisions, even if it means a smaller business in the near term.' Ashley launched his empire in 1982, when he opened Mike Ashley Sports in Maidenhead, which would later become Sports Direct. Frasers, which also owns House of Fraser and Flannels, has been keen to add luxury brands such as Hugo Boss and Gieves and Hawkes to its stable of retailers. Mike Ashley's Frasers Group has purchased luxury department store Harvey Nichols for an undisclosed fee Ashley's acquisition of Lillywhites in 2002 backfired after the upmarket sports emporium was quickly stocked with Sports Direct's rescue brands such as Everlast. In 2019 the tycoon made an unsuccessful attempt to dump the enterprise when the leaseholder demanded a higher rent. He will now need to convince luxury suppliers such as Balmain, Armani, Cartier, Max Mara and Ralph Lauren that he is a suitable owner for Harvey Nichols. Frasers' acquisition of online luxury marketplace Matchesfashion has already sparked concerns among some of the glamorous brands stocked by Harvey Nichols as well as worries for future staff cuts. Just three months after buying Matchesfashion in December 2023 for £52million, Frasers placed the company into administration with 273 job losses. This led to designer brands, including the likes of Burberry and Gucci, being owed a total of £36million. Lisa Webb, Which? consumer law expert, added on Thursday: 'Fraser's Group must ensure that existing obligations to Harvey Nichols' customers are honoured if it wants to maintain goodwill in the brand. 'That means accepting gift vouchers, fulfilling online shopping orders and processing returns and refunds as if nothing has changed. No consumer should be left out of pocket as a result of this sale.' Ashley said last week that Harvey Nichols is 'in a death spiral'. High Street fashion chain Next withdrew its interest earlier this summer while some private equity companies were also reportedly involved in buyout talks. In its 1990s heyday, fans of Harvey Nichols included Princess Diana and other fashion-forward 'Sloane Rangers'. Mary Portas, the store's young creative director, made a deal with Absolutely Fabulous where its brash and boozy fashionista characters often mentioned the store and wore its clothes. She transformed it into a trendy destination for the 'fashion-forward' with eye-catching window displays. But it has failed to make a profit for five years after being hit by a downturn in tourism spending following the Covid pandemic and the removal of a VAT-free shopping scheme. The business had previously said prospective buyers would need to cough up as much as £60million in investment to help bring it back to its former glory. Harvey Nichols' Knightsbridge store opened in 1889. It was later bought by Poon in 1991 for £53million and was listed on the London Stock Exchange in 1996. Alongside its best-known shop in London, Frasers will buy the shops in Edinburgh, Birmingham, Leeds and Manchester, and its smaller store in Bristol. The transaction excludes the Oxo restaurant which has been sold to another buyer. Murray said: 'By integrating Harvey Nichols into our existing luxury ecosystem, we believe Frasers Group can deliver the expertise, infrastructure and commitment needed to give the business the best chance of long-term success.' DIY INVESTING PLATFORMS Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence. Compare the best investing account for you